The Reserve Bank of Australia (RBA) is diving into the world of digital money, but they’re not going all-in on a retail CBDC just yet. Instead, they’re focusing on a wholesale CBDC, which would be used by banks and other financial institutions.
Why Wholesale?
According to RBA Assistant Governor Brad Jones, a wholesale CBDC offers more economic benefits and fewer challenges than a retail CBDC. It’s seen as a more gradual evolution of the current monetary system, rather than a radical change.
“The wholesale version also recognizes the stabilizing role of central bank money in the settlement of wholesale market transactions, particularly in markets that are (or could be) systemically important,” Jones said.
The Next Step: Wholesale CBDC Research
The RBA is kicking off a new project on wholesale CBDC and tokenized commercial bank deposits as part of their three-year research program on the future of digital money.
Retail CBDC on Hold
While the RBA sees potential benefits in a retail CBDC, they haven’t found a strong enough case for it yet.
“Given the potential benefits of a retail CBDC in Australia appear modest at the present time, and a retail CBDC would create non-trivial challenges for financial stability and monetary policy implementation, we are yet to see a strong public policy case emerge for issuing a retail CBDC,” Jones explained.
So, while Australia is exploring the world of digital money, they’re taking a cautious approach, starting with the wholesale side of things.
