The Reserve Bank of Australia warned of dealing with the digital central bank money (CBDC) and private-sector stablecoins with caution.
According to the bank, there is no need for issuing a CBDC in Australia during the current time.
In its latest payments paper, it referred to the state’s new payments platform, describing it as being an efficient one.
This skepticism comes amidst a strong trend between other countries that are dealing with digital currencies as a priority.
Moreover, it noted that the future of digital currencies is uncertain, pointing to the Facebook Libra currency. The bank explained that it is not obvious whether the currency will obtain regulatory approval and become operational or not.
Desire in Australia
In comparison to Swedes, Australians are not relinquishing banknotes as quickly as other citizens, according to Cointelegraph.
It added that cash demand has increased significantly during the pandemic process, according to Somag News.
However, it announced its commitment to continue to provide access to banknotes “for as long as Australians wish to keep using them.”
According to the paper, a CBDC could have noteworthy shortcomings for Australia, such as higher funding costs for commercial banks.
It explained that 60% of the banks’ funding comes from deposits and two-thirds of which comes from at-call deposits. That’s why, any change in this funding would push the banks to depend on equity and capital markets for funding.
“The loss of deposit funding and greater reliance on other funding sources could result in some increase in banks’ cost of funds and result in a reduction in the size of their balance sheets and in the amount of financial intermediation,” it said.
“In the presence of a CBDC, a run on the banking system as a whole would become feasible; if depositors had concerns about the entire financial system, they could seek to make large-scale transfers of commercial bank deposits into CBDC,” it added.
Earlier this year, the bank said it “established a small in-house Innovation Lab as a way to strengthen engagement with, and understanding of, new and emerging technologies that are relevant to its policy and operational responsibilities.” In at least some nod to the technicalities back in January, the central bank envisioned that the digital currency might be issued via blockchain platform, according to PYMNTS.