By George Ward
In a released speech on December 8th, the RBA (Reserve Bank of Australia) said several financial institutions had submitted 140 use cases for its upcoming CBDC. However, critics fear an Australian CBDC could replace the country’s fiat.
At a December 8th bank conference, Brad Jones, Assistant Governor of the RBA, talked about the effect of CBDCs on the country’s economy. According to Jones, the reserve bank is surprised by the massive interest in its upcoming CBDC, the e-AUD.
The central bank has received several CBDC use cases after introducing a CBDC white paper on August 9th. Meanwhile, the use cases cover government payments, offline payments, and e-commerce.
Jones said the e-AUD team is assessing suggested use cases. After the assessment, they will pick some use cases for next year’s pilot project.
Meanwhile, the report of the CBDC initiative will be out in the middle of 2023. Additionally, Jones mentioned some potential risks that might come with the Australian CBDC.
Traditional Banks May Have Issues
The RBA executive said banks could encounter liquidity issues if the e-AUD becomes the dominant means of exchange. For instance, if Australians choose the CBDC over banknotes, the funds available to banks would drop.
He said banks might not have enough funds to lend to consumers. In addition, the Assistant Governor said Australians might choose to keep their assets as “risk-free” CBDC.
This could cause bank runs as users withdraw their funds from banks en masse. On the contrary, the Assistant Governor believes the e-AUD hold several benefits for Australians.
Such benefits include privacy, as the RBA will not allow private organizations to use customers’ data. Furthermore, Jones also commented on the possibility of offline transactions. He said this could increase payment efficiency and reduce costs for end-users.
Jones concluded his remarks by saying Australians should have confidence in the RBA. He told them that the country’s central bank would continue printing banknotes as long as they were a means of exchange.
However, there is a widespread fear among naysayers that CBDCs would result in the elimination of paper banknotes. Conversely, several central banks argued that digital currency would complement banknotes and not replace them.