Australia’s RBA Announces A Shift Toward Wholesale CBDC From Retail, Citing Greater Economic Benefits

Australia’s central bank has announced a shift toward wholesale CBDC development, citing greater economic benefits and fewer challenges compared to a retail version.

At a conference, Brad Jones, the Assistant Governor of the Reserve Bank of Australia (RBA), unveiled the launch of Project Acacia, a trilateral three-year endeavor undertaken in partnership with the Treasury to explore digital currency.

The project builds on last year’s CBDC pilot. This project will explore new ledger technologies and concepts such as programmability and atomic settlement to assess potential gains for Australia’s financial infrastructure. Jones mentioned that future phases might involve working with regional central banks on cross-border applications.

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Australia Central Bank to Release CBDC Consultation Paper in October

In October, the RBA and its research partners will release a consultation paper to solicit insights and perspectives from the industry.

Additionally, the policymaker has announced the establishment of CBDC advisory forums for industry and academia. These forums will launch in early 2025. They will address both retail and wholesale CBDC issues.

“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.”

RBA to Promote Regulatory Sandbox Reforms for Digital Currencies in 2024

In 2025, a third initiative will build on insights from the previous CBDC pilot by advancing regulatory sandbox reforms for financial innovation, including digital currencies and infrastructure. Industry feedback suggests potential improvements to the sandbox, which temporarily allows unlicensed entities to test new financial products.

The Treasury will be in collaboration with the government to assess and possibly implement changes based on an independent review.

Moreover, the introduction of a retail central bank digital currency (CBDC) for public use could trigger significant political and economic challenges, potentially reshaping Australia’s financial system, the policymaker. The Australian Government would ultimately decide on implementing a retail CBDC, he noted.

Currently, 134 countries, or 98% of the global economy, are exploring CBDCs, according to the Atlantic Council. China’s e-CNY, the world’s largest CBDC pilot, leads the way.

By June 2024, e-CNY transactions amounted to $986 billion across 17 regions, impacting diverse sectors such as education, healthcare, and tourism.

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