Australian Central Bank Is Not Considering Centralized National Digital Currency
Lately, several countries have started developing central bank-backed digital currencies. At this time, the market is unsure whether centralized cryptocurrencies are a good addition, since avoiding control by a central authority is what most popular coins are all about.
Recent reports indicate that the Assistant Governor of the Reserve Bank of Australia, Michelle Bullock, agrees. In the speech she gave at the Sibos Conference, taking place in Sydney, she mentioned how Australia and other central banks don’t have any clear reason to pursue such projects.
Additionally, Manish Kohli, the Global Business Head for Citi, mentioned that global payment technologies are quickly advancing, therefore creating central bank-backed digital currencies is not currently necessary.
It seems like many central banks are pressured to pursue such projects, as it would open up their payment infrastructure, and make transactions like instant gross settlements possible. According to FN, “Some Fintechs want to be able to move real money over industry-specific distributed ledgers, which would allow for atomic settlement.”
For banking purposes, Kohli believes that blockchain’s potential in this niche is already eclipsed by three advancements in the industry, these being improved inter-bank payment infrastructures, several updates on the SWIFT platform, and national infrastructure advancements making real-time transaction processing possible.
Additionally, Ms Bullock thinks that “the system works well and you don’t actually need access to direct settlement to do lots and lots of business.” The assistant governor also believes that employing such a system could affect banks whenever a financial crisis strikes, as it would strip financial institutions of their liquidity.
Despite these statements, the market is filled with research studies that support different claims. With this in mind, some believe that central bank coins are meant to foreshadow decentralized digital currencies, whereas others think that the idea can lead to economic growth. After all, Russia, Iran and Venezuela are all considering national cryptocurrencies, as it’d allow them to evade sanctions imposed on fiat-based transactions. Venezuela has already launched the Petro Coin, allegedly backed by barrels of oil.
Currently, it is too early to determine what effects these coins would have on the financial market. Regardless, leveraging blockchain technology alone could be a great step forward for banks throughout the world, due to benefits such as quicker cross-border payments, fast settlements and considerably lower transaction costs. So, as long as fiat remains relevant, adopting blockchain technology for banking purposes is a good step forward. It remains to be seen whether introducing central bank cryptocurrencies will benefit the general public.