The Chairman of the Reserve Bank of Australia discussed the potential of electronic versions of the Australian dollar, which over time can be used with the technology of the distributed registry.
He also touched on the difficulties of the private issue of money compared with the public.
13 December 2017 the Chairman of the Reserve Bank of Australia (RBA) Philip Lowe delivered a speech “Electronic Australian dollar?” (“An eAUD?”) in Australian Payment Summit. The chair noted the possibility of creating a currency based on the technology of the distributed registry.
“Today I want to share my thoughts about such a future and to answer the question I am often asked – whether the RBA intends to release a digital form of the Australian dollar? Let’s call it eAUD,” said Lowe.
“Short answer to this question, I would say that we have no plans in the near future to release a digital form of the Australian dollar,” he explained, loosening the hopes of the adherents of financial technologies. “But – he added – we continue to consider all “pros” and “cons”. Along with this, we are also exploring development opportunities for the regulation of Central Bank money at less than the emergence of new technologies.”
Lowe told the audience five “working hypotheses” about the future of banking and electronic payments. They are as follows:
1. There will be a substantial shift to electronic payments, but in spite of this, be a place for banknotes, although they will not be used so often.
2. Likely that the transition to electronic payments will mostly occur through the products offered by the banking system. However, it is not a given. To meet the needs of clients will need financial institutions that can offer cost effective solutions.
3. Electronic form of banknotes will coexist with the electronic payment system used by banks, but the arguments in favor of this new form of money yet to be determined. In the case of General distribution of the electronic form of the Australian dollar as a means of payment, a better alternative is the release of RBA and the distribution of financial institutions, as is happening now with the physical bills.
4. Another possible option, which from time to time proposed to promote the transition to electronic payments is the offer of the RBA to any resident of Australia exchange settlement account with a simple and low-cost functionality. The truth is, we do not believe it is appropriate.
5. It is possible that over time, the RBA may issue a new form of digital money – a kind of exchange settlement accounts – perhaps using the technology of the distributed registry. This money can be used in specific payment systems. The reasons for this are not yet defined, but we are ready for such an idea.
One of the main issues regarding digital currencies Central banks (CBDC) – whether they are issued by the existing Central banks. Private equivalents (e.g., Tether) are gaining popularity and, without exaggeration, compete with traditional financial infrastructure with its money. Clearly there are numerical issues of supervision, responsibility and monetary policy. Analyze these questions and complex answers are difficult.
“In principle, nothing prevents the issue tokenizing eAUD the private sector,” said Lou. “For example, you can imagine that tokens eAUD will be issued by banks and large non-Bank institutions. However, it is hard to imagine their production in the form of tokens cryptocurrency Protocol like bitcoin without a responsible Central authority”.
This is a difficult question associated with one of the biggest challenges private currency. Namely, who can guarantee its value? The Chairman drew attention to this question.
“Although it is possible to imagine a special issue eAUD, from experience we can say that the private issue of Fiat currency will be accompanied by significant challenges and risks,” he said.