In a recent panel discussion of the G20 finance officials meeting in Indonesia, Reserve Bank of Australia (RBA) governor Philip Lowe signalled his support for privately issued stablecoins, subject to appropriate consumer protection guardrails.
Private Sector Better Suited to Issuing Digital Dollars?
Just weeks after Australian Treasurer Jim Chalmers said that crypto would remain excluded from foreign currency tax arrangements, RBA head Lowe has said that privately issued stablecoins may be better than central bank digital currencies (CBDCs), provided the relevant companies are suitably regulated.
In a panel discussion that included the inherent risks of decentralised finance (DeFi) projects, talk shifted to CBDCs and their potential application in both a retail or wholesale context.
With the recent implosion of “stablecoin” UST and Luna, regulation has come into sharp focus, an issue that no doubt partially informed the RBA chief’s comments on privately issued stablecoins:
If these tokens are going to used widely by the community they are going to need to be backed by the state, or regulated just as we regulate bank deposits.
Philip Lowe, RBA governor
Lowe added: “I tend to think that the private solution is going to be better – if we can get the regulatory arrangements right – because the private sector is better than the central bank at innovating and designing features for these tokens”.
As crypto regulation is one of the newly elected federal government’s stated priorities, those who oppose retail CBDCs on the basis of financial surveillance and infringements on freedom will be pleased to hear that the RBA governor is seemingly more inclined towards a free-market solution. However, that in itself provides no guarantee, as Tether (USDT) and Circle (USDC) have both been accused of censorship in the past.
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