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Gungun Bhatia
Dec 8, 2022
by Gungun Bhatia

Australian CBDC Draws Unexpected Interest But Could Hurt Banks: RBA

Australian CBDC

Table of contents

  1. Potential Impact of Australian CBDC
  2. “eAUD” Pilot Program
  3. Risk-Free CBDCs
The financial industry has submitted more than 140 use case concepts to an Australian Central Bank Digital Currency (CBDC) test program, but the Reserve Bank of Australia (RBA) fears that it might supplant the Australian dollar and cause individuals to abandon conventional banks completely.

Potential Impact of Australian CBDC

In a speech made public by the RBA on December 8 that was scheduled to be delivered by Assistant Governor Brad Jones at a central bank event on December 8 and December 9 local time, Jones extensively discussed the potential impact of a CBDC on the Australian economy.

According to Jones, the RBA was taken aback by the level of industry interest they experienced after issuing a white paper on August 9. More than 80 financial institutions proposed use cases that covered a wide range of topics, including e-commerce, offline transactions, and federal subsidies.

“eAUD” Pilot Program

The team developing the "eAUD" pilot program is deciding which of the suggested use cases to include in the program's trial phase early next year. The team anticipates publishing a study on the program in the middle of 2023.

The concerns that may arise from an Australian CBDC are also covered by Jones, who highlights the liquidity problems and other problems the banks would experience if a CBDC ends up being their preferred source of assets.

Risk-Free CBDCs

A substantial number of Australians preferring a CBDC over the Australian dollar might result in banks not having enough capital to lend to customers, which would make it difficult for the RBA to conduct monetary and fiscal policy, he added.

Furthermore, Jones points out that Australians' preference for risk-free CBDCs may result in banks running as a result of a widespread exodus of deposits from Australian banks.

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Australian CBDC Draws Unexpected Interest But Could Hurt Banks: RBA
Gungun Bhatia
Gungun is an enthusiastic writer that likes to create content for various aspects of the blockchain and crypto industry. She carries out extensive research and provides readers with informative and high-quality material.

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