Philip Lowe, the governor of the Reserve Bank of Australia, has reiterated intentions for launching an Australian national digital currency.
It’s no longer surprising that many central banks around the world are increasingly exploring and studying the possibility of launching a national digital currency (known as a “CBDC”). In fact, the Bank of International Settlement confirmed in a survey that about 80 percent of central banks planned for a CBDC.
Banks can use digital currencies for settlements
While speaking with the Melbourne Business Analytics Conference on Monday, the governor mentioned that the Australian central bank “is conducting research on the technologies and policy implications of a potential wholesale central bank digital currency.”
The world is gradually transitioning to digital alternatives for payment, especially since the cash bans of outbreak of the coronavirus pandemic.
Lowe said technology (blockchain) and data are unlocking this new possibility through digital currencies. Through distributed ledger technology, many big banking institutions could use digital currencies in the future to support the settlement of transactions in the inter-bank payment system, instead of transacting in “regular” Australian dollars.
RBA is still working on a Wholesale CBDC
The RBA governor also stated that the central bank is still working on the concept for a wholesale CBDC via its in-house Innovative Labs.
As of February 20, Crypto News Australia reported that the central bank was being sceptical about a retail CBDC. The Payments System Board of the central bank noted that they don’t see any strong case to launch a retail-focused CBDC. Instead, the bank was researching the feasibility and implications of launching a wholesale CBDC.
Wholesale CBDCs are more beneficial to financial institutions for payment and settlements than retail CBDCs, which are designed for general public use.
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