Australia’s Central Bank Warms to Digital Currency as the Future of Money

Vignesh Karunanidhi
Australia's Central Bank Warms to Digital Currency as the Future of Money
Source: Pixabay

In a significant speech, the Reserve Bank of Australia signaled an openness to central bank digital currencies (CBDCs) as the evolution of money in the digital era.

According to RBA Assistant Governor Brad Jones, well-regulated stablecoins and tokenized forms of existing deposits could enable widespread tokenized transactions. However, Jones said the risks around private stablecoins underscore the benefits of CBDCs.

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A tokenized version of central bank reserves represents a “minor change” from current practices, Jones explained. Bank deposits are already exchanged digitally via central bank systems. The RBA envisions CBDC-enhancing areas like atomic settlement in tokenized asset trading.

Jones chronicled the progression of money from physical to digital, emphasizing the need to adapt as technology enables increased tokenization. Findings from the RBA’s own CBDC pilot project highlighted opportunities for a wholesale CBDC to complement innovative private money like tokenized deposits.

By exploring a government-backed alternative, the RBA acknowledges the inevitability of digitized money while trying to mitigate the volatility and uncertainty of decentralized cryptocurrency. How Australia navigates this complex balance could determine the future landscape of digital currency and payments in the country.