Australia Not Ready to Issue Digital Australian Dollar
According to Reuters, RBA governor Philip Lowe while giving a speech on Thursday (Dec. 9, 2021), said that there is yet to be a “strong public policy case” for Australia to develop a retail CBDC, given the country’s efficient e-payment system. However, the RBA Сhief also noted that the government could consider a digital version of its sovereign currency as the technology evolves.
Meanwhile, Lowe did not hesitate to warn investors about risks associated with cryptocurrency investments, such as volatility. Interestingly, the Commonwealth Bank of Australia (CBA) became the first Australian financial institution to offer crypto services to its customers.
The head of the RBA was also wary about stablecoins, crypto-assets pegged to fiat currencies such as the U.S. dollar. According to Lowe:
“A lesson from history is that privately issued and backed money all too often ends in financial instability and losses for consumers.”
The RBA governor added that privately-issued stablecoins or digital tokens
“need to be backed by high-quality assets and meet high standards for safety and security.”
Apart from Australia, Norway and Switzerland are also not eager to issue a sovereign digital currency. On the other hand, places like China are accelerating digital yuan efforts, with other central banks having their CBDC projects on different stages. Indonesia, meanwhile, is planning to develop a CBDC as one of the tools to fight cryptocurrencies.
France and Switzerland Successfully Complete Wholesale CBDC Experiment
The Bank of France and Swiss National Bank recently completed an experiment that saw the use of a wholesale CBDC for cross-border settlements. The Bank for International Settlements (BIS), Switzerland-based banks Credit Suisse and UBS; SIX Swiss Exchange, French investment bank Natixis, Irish consulting firm Accenture, and fintech company R3 were involved in the trial.
The wholesale CBDC experiment, called Project Jura, was first announced back in June 2021. Also, the trial was part of a series of experiments first announced by the Bank of France in July 2020. Following the announcement of Project Jura, France’s central bank deputy governor, Sylvie Goulard, said:
“The Banque de France is convinced of the potential benefits of wholesale central bank digital currency to provide maximum security and efficiency in financial transactions […]. In this perspective, we are delighted to be able to conduct an important experiment — called Jura — on cross-border settlement in partnership with the Swiss National Bank and the BIS Innovation Hub.”
Meanwhile, the central banks noted that the test was a success, with the head of the BIS Innovation Hub, Benoît Coeuré:
“Project Jura confirms that a well-designed wholesale CBDC can play a critical role as a safe and neutral settlement asset for international financial transactions.”
