Australia Central Bank: Cryptos Won’t Latch on in the Country, Let Alone Facebook’s Libra
- Cryptocurrencies have a “scalability trilemma” – Reserve Bank of Australia (RBA)
- “There’s a lot of water under the bridge before Facebook’s proposal becomes something we’re using all the time” – Crypto skeptic & Central bank’s chief, Philip Lowe
- Facebook is facing criticism not only from the Congress and European authorities but also from the Reserve Bank of Australia (RBA). The central bank of Australia doesn't see cryptocurrencies catching up to actual payments anytime soon.
In a 5,800 word paper published in the Bulletin publication of RBA on Thursday, four of the RBA analysts say they see:
“little likelihood of a material take-up of cryptocurrencies for retail payments in Australia in the foreseeable future.”
Cryptocurrencies, to the RBA, suffer from a “scalability trilemma” as the digital asset fails in one of three areas viz. security, scalability, or decentralization.
“As long as the Australian dollar continues to provide a reliable, low-inflation store of value, and the payments industry continues to work on the efficiency, functionality, and resilience of the Australian payments system, it is difficult to envisage cryptocurrencies presenting a compelling proposition that would lead to their widespread use in Australia,” said the authors.
RBA analysts also warned that while the companies like Facebook may be attracted to stablecoins, Libra is backed by a basket of traditional currencies, this reliance on traditional banking system in terms of fiat may not appeal to Bitcoin-focused “crypto-libertarians.”
Don’t hold your Breath
The central Bank’s chief who is a long term skeptic about cryptocurrencies said the project might be a long way off. When asked about Facebook’s cryptocurrency Libra, Central bank’s chief, Philip Lowe said,
“There’s a lot of water under the bridge before Facebook’s proposal becomes something we’re using all the time.”
“There are a lot of regulatory issues that need to be addressed and they’ve got to make sure there’s a solid business case, so we’ve got to be careful before we jump to conclusions.”
Lowe is an outspoken critic of Bitcoin who during its 2017 bull run described its parabolic surge as a “speculative mania” and said it is more likely to appeal to criminals than customers.
“I have long thought that a kind of cryptocurrency would not take off in Australia because we already have a very, very efficient electronic payments system that allows anyone of us to make bank payments to another person in five seconds just knowing their mobile phone number,” Lowe said Thursday.
What’s even more concerning about social media giant’s crypto project is despite clearly stating that it intends to provide financial services to the 1.7 billion “unbanked” through Libra, it won’t be launching its Calibra cryptocurrency wallet in China, Iran, North Korea, or its biggest market, India.
Good thing that it isn’t going with “GlobalCoin” anymore!