When it comes to Libra and the viability of central bank digital currencies (CBDCs), the Reserve Bank of Australia (RBA) has announced it has serious doubts.
RBA officials said in December last year they don’t believe cryptocurrencies will ever take the place of money issued by governments. While Libra and CBDCs are believed to promote financial inclusion, RBA has assessed their innovation in the global fintech space and concluded they’re redundant solutions.
RBA Has a Team Evaluating New Tech for the Country’s Payments System
Since 2018, the RBA has had their own research group that assess' new payment structures and technology involved for the country. This team evaluated CBDCs and what a “wholesale settlement system” can do on a private Ethereum (ETH) network, as to attempt understand better if tokens could be efficient when it comes to commercial banks issuing currency.
CBDCs Encouraged by Some Central Bankers
There are some central bankers, Mark Carney and Christine Lagarde included, who encourage CBDCs, not to mention the People’s Bank of China (PBOC) is currently testing the impact on the public of its future digital Yuan. However, RBA thinks an Australian digital currency would only disrupt the country’s financial system at this point, especially when it comes to the retail industry using it. It cites a research done by the accounting company EY and that discovered a CBDC wouldn’t be effective to promote Australia’s fintech sector.
The RBA Doesn’t Think Cryptocurrencies Have a Future
After watching the asset class for years, the RBA doesn’t see a future for cryptocurrencies, especially since these aren’t widely accepted or used as payment and their volatility is more popular among speculators, not among ordinary people. Philip Lowe, RBA’s governor, doesn’t see the role of Libra in a country that already has a very efficient electronic payment system like the NPP, which was introduced in 2018 and allows users to make transactions using their email or phone number. While backed by the RBA, many commercial banks didn’t support the NPP, with RBA describing it as disappointing in June 2019.