The Reserve Bank of Australia (RBA) is rapidly developing a wholesale central bank digital currency (CBDC) as developed nations move toward a cashless society. RBA Assistant Governor Brad Jones announced that the bank is launching Project Acacia next month, with the goal of developing a wholesale CBDC within the next three years.
The first form of this digital currency is not yet intended for retail, but extensive research has gone into determining how Australia can transition away from hard currency. Last year, the central bank partnered with the Digital Finance Cooperative Research Center (DFCRC) to determine the best methods to begin transitioning away from the Australian dollar, with reports last stating “a CBDC could be viewed more as an enabling complement to, rather than substitute for, private sector innovation.” The program studied corporate bond settlements by the Australian Bonds Exchange, tokenized FX settlements, as well as offline payments from ANZ bank. The pilot program was met with some difficulties, but the central bank is now committed to uncovering the proper method prior to deployment. “Some uncertainties related to the bespoke nature of the pilot CBDC itself. For instance, the pilot CBDC was issued as a contractual liability of the RBA rather than under a legislative framework, as would likely be the case if a decision was ever made to issue a CBDC in the future,” the report added.
Jones indicated that industry forums will begin in 2025 to discover methods for deploying both wholesale and retail methods. “We have benefited significantly from engagement with industry and the academic community on various CBDC issues over recent years, and we now seek to put more structure around this dialogue,” he said. “These forums would play a similar role to those the RBA has convened in recent years with economists from industry and academia, to hear different views on monetary policy issues.”
For now, wholesale CBDC and tokenized commercial bank deposits are the priority. Jones called recent developments “revolutionary,” as they very well will change our monetary system. About 98% of the global economy, or 134 countries, are exploring methods to launch CBDCs successfully. The Australian Government will be the final decision-maker on the matter, and rest assured all governments are eager to implement an effective digital currency as soon as possible as they believe they will see a large uptick in taxation as no “money” can find its way off the grid under this system. Some of my sources say that governments believe they can increase taxation by up to 35% under a cashless society. “If cash usage continues to decline, it has been suggested in some jurisdictions that a retail CBDC may be needed to preserve monetary sovereignty,” Jones further stated.
