Australia’s new Reserve Bank of Australia (RBA) Governor, Michele Bullock, has endorsed the adoption of a wholesale Central Bank Digital Currency (CBDC) over a retail counterpart, citing successful case studies as evidence.
In a recent interview, Bullock highlighted the positive outcomes observed from the CBDC experiments, particularly in use cases like cattle auctions. While expressing reservations about the retail CBDC side, Bullock did not delve into specific downsides. However, industry experts have raised concerns about potential risks, such as bank disintermediation impacting commercial banks’ profitability.
Bullock, who assumed the role of RBA Governor in September, supports a wholesale CBDC for enhancing interbank settlements. Her backing stems from her leadership in Project Atom, the RBA’s Proof-of-Concept (PoC) for asset tokenization.
Despite favoring wholesale CBDC, Bullock affirmed that the RBA will monitor developments in retail CBDCs in other jurisdictions. She stated, “I know other countries are looking at retail CBDC, and we will continue to keep in touch with that, but that’s probably not our main focus for the next little while.”
Bullock disclosed the RBA’s plans to leverage CBDCs for settling transactions involving tokenized assets to enhance efficiency and safety. Regarding regulation, she mentioned a preference for allowing industry self-regulation but noted that the concept of a regulatory sandbox remains under consideration.
The RBA’s interest in tokenizing financial assets was previously confirmed by Deputy Governor Brad Jones, emphasizing the potential role of CBDCs in addressing digital asset instability.
Australia has increased its CBDC experiments, conducting a live pilot involving commercial banks, payment services firms, and technical partners. The pilot explored various use cases, including carbon credit trading, cattle auctions, decentralized finance integration, and cross-border payments. Despite encountering challenges in real-world deployment, the RBA remains committed to exploring the viability of asset trading, corporate bond settlements, and interoperable CBDCs.
