“To date, there has been essentially no issuance of Australian dollar stablecoins nor use of them as a payment method in Australia,” the RBA said in a submission [PDF] to the Senate Select Committee on Australia as a Technology and Financial Centre. “Nevertheless … the working group [continues to] study the benefits and possible risks associated with stablecoins and to identify any possible regulatory gaps. “If a stablecoin is designed to be a safe payment instrument and act as an alternative to other forms of money, then it is important for consumer protection that it is appropriately regulated.” The CBDC would be a liability of, or a claim on, the central bank, in a digital form. This could include both retail CBDC, which would be like a digital version of cash that is essentially universally accessible, and wholesale CBDC, which would be accessible only to a more limited range of participants. Like cash and settlement account balances, the unit of account of the CBDC would be the sovereign currency, such as the Australian dollar. It would be convertible at par with other forms of money, and it would likely also be specified to serve as legal tender. The RBA said that while there is significant research underway globally on CBDC, there is really only one full live implementation, the retail-focused “Sand Dollar”, which is issued by the Central Bank of the Bahamas. The People’s Bank of China is also in an advanced stage of testing possible issuance of a retail CBDC or “digital yuan”. “It is worth noting that while the interest in CBDC has in large part been a reflection of developments in cryptocurrencies, stablecoins, and distributed ledger technology (DLT), there is no presumption that any CBDCs that are implemented will use DLT,” it noted. “Like many other advanced-economy central banks, the bank does not consider that a policy case has yet emerged for issuing a CBDC. “However, the bank is continuing to closely monitor the case for a retail CBDC and is engaging with some other central banks on possible use cases, including for cross-border payments.” The RBA said it has also been conducting research on the technological and policy implications of a wholesale CBDC, which is being undertaken at its in-house Innovation Lab and included the development in 2019 of a limited proof-of-concept of a DLT-based interbank payment system using a tokenised form of CBDC backed by exchange settlement account balances held at the RBA. “Currently, the bank is close to finalising a project with a number of external parties that extends the earlier proof-of-concept in a number of ways, including to incorporate tokenised financial assets,” it added. The project explores the implications of delivery-versus-payment settlement on a DLT platform as well as other programmability features of tokenised CBDC and financial assets, and the RBA said a report on the project will be published shortly. The bank also noted it is participating in the Digital Finance Cooperative Research Centre which is aiming to develop and exploit the opportunities arising from the digitisation of assets so they can be traded and exchanged directly and in real-time between any individual or organisation.
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