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Highlights
- Reserve Bank of Australia (RBA) Governor Philip Lowe ruled out any strong need for a central-bank digital currency.
- However, Lowe cautiously welcomed the possibility of creation of central-bank digital currency.
- Lowe said that Australians are now choosing to make payments through their digital wallets rather than bank cards.
A day after Australian Treasurer Josh Frydenberg’s remarks that the government was mulling a digital currency as part of an overhaul of the payments system, the Reserve Bank of Australia (RBA) Governor Philip Lowe said there was no strong need for the same. However, Lowe cautiously welcomed the possibility of the creation of a central-bank digital currency.
“Bank's view is that no strong public policy case has yet emerged for the introduction of a CBDC for general use. Australian households and businesses have access to payment services that have been upgraded significantly in recent years and meet most of their current needs,” Lowe said at Australian Payments Network Summit on Thursday.
“It is not obvious that a CBDC would be a solution to any particular problems or that there would currently be significant demand for one,” he added.
Image Source: © Lucidwaters | Megapixl.com
Digital tokens drive the future
Lowe said that Australians are now choosing to make payments through their digital wallets rather than bank cards. So, wallets can contain tokens that could be used to make payments and these tokens could be issued by the central bank, a private bank, or another entity. He clearly stated that digital tokens would become a part of Australia’s payments system.
“One possibility is that tokens are issued by and backed by the Reserve Bank just as we issue and back Australian dollar banknotes. This would be a form of a digital currency,” he said.
“How far we go in this direction and what form these take are yet to be determined,” he noted.
Lowe on cryptocurrencies not backed by RBA
Lowe was also unsure about the possibility of the use of cryptocurrencies not backed by the RBA. He said that he was skeptical that the RBA would move ahead in this direction for general purpose payments.
He also commented that the asset which is used to settle most transactions will likely remain in some form of “secure fiat currency with a stable value, rather than cryptocurrency with a volatile price.”
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