As most countries double down efforts to implement central bank digital currency (CBDC), Australia has taken a separate route to attain economic prosperity. At the Intersekt Fintech Conference, where top-tier investors converged to share business insight on financial technology, the Australian financial regulators unveiled a three-year research plan for developing the wholesale CBDC dubbed ‘Project Acacia.’
The plan, co-authored by the Reserve Bank of Australia (RBA) and Treasury, demonstrated that the government has reversed its decision to create retail CBDC. Instead, the Australian authority will invest in developing wholesale digital currency to tap into unrealized economic opportunities in the region.
Australia Launches 3-Year Wholesale CBDC Roadmap
A statement from the financial system assistant governor at RBA, Brad Jones, confirmed that the country’s apex bank would align its work plan to develop infrastructures that support the launching of wholesale CBDC.
The decision to shift its focus to wholesale CBDC emanated from an intensive assessment conducted by the RBA and the Treasury to examine how the development of the digital dollar will impact the Australian economy.
From the analysis, the financial regulators noted that wholesale CBDC offered unmatched economic opportunities compared to retail digital currency. Jones explained that retail CBDC aims to streamline consumers’ day-to-day activities while the wholesale digital dollar provides cutting-edge solutions to banks and financial providers.
The executive noted that the issuance of wholesale CBDC could drive decisive action for reforming Australian monetary policy to revive financial innovation.
Australia Bets Big on Wholesale CBDC: Here is Why?
Also, Jone projects implementing wholesale CBDC would positively impact the financial sector by reducing risks and operation-related costs. Citing data from the Australian Bureau of Statistics, the financial regulators noted the country’s economy maintained a modest increase of 0.2% in Q2 of 2024.
Therefore, the Aussie financial watchdogs agreed to redirect their attention to implementing wholesale CBDC to create a sustainable economy. They envisioned that wholesale digital dollars would support innovation and promote business agility.
Conversely, the regulators profiled retail CBDC as an unsuitable financial option to meet the country’s current economic needs. The RBA observed that retail CBDC might impact bank runs since it encourages high borrowing and spending.
However, if Australia attains sustainable economic growth, the regulators might reconsider developing the retail CBDC to cope with the changes in financial dynamics. The assistant governor noted that if new legislation is passed authorizing the issuance of retail CBDC, the lawmakers will be mandated to amend the existing financial law.
Ranking among the world’s largest economies, the financial regulators remain optimistic about issuing retail digital dollars in the future to maintain financial stability and inclusivity. Therefore, if Australia strengthens its economic pinnacle, the RBA will develop and issue a follow-up report on retail CBDC by 2027.
Is CBDC the Future of Money?
In the meantime, the RBA and the Treasury will be committed to implementing Project Acacia to maintain the national currency’s stability amid global currency shifts. The project seeks to integrate blockchain technologies into the traditional financial sector to tokenize bank deposits.
The development will support the creation of an open, programmable, and effective payment infrastructure for global markets. At the primary stage of Project Acacia, the RBA will collaborate with other central banks to support the use of wholesale CBDC in cross-border transactions.
The deputy governor believes that Project Acacia will foster economic growth in the region. However, to attain Project Acacia’s goal of transforming the future of central bank-backed coins, the RBA plans to consult the public and extensively research asset tokenization.
Having a thriving economy, Australia seeks to retain its competitiveness in the global economy by introducing digital currency. A recent report for BIS shows that Australia is part of 94% of central banks working on developing the CBDC.
The statistics show that most 134 countries working on implementing digital currency prefer the wholesale version of the CBDC. To stay updated with ongoing developments in CBDC, follow The Bitjounal.
