- 5 September 2022
- Posted by: Cryptovalues
- Category: Central Banks, Cryptovalues News, World News
A recent survey by the Bank for International Settlements revealed that 90% of central banks globally are working on a digital currency issued by a central bank. Some of them are still in the exploration phase. Others are in the pilot phase and even some have already been launched for use at wholesale or retail level.
Australian central bank governor Phillip Lowe said in mid-July at a G20 event that regulated private tokens could be better than central bank digital currencies.
The head of the Hong Kong Monetary Authority, who joined Lowe on a panel at the G20 event, said that regulation of these private tokens is crucial to address the risks posed by decentralised finance.
Some examples of privately issued tokens are USDT issued by Tether, USDC issued by Circle and the Pax Dollar issued by The Paxos Trust. The rule is that issuers of privately issued tokens must hold reserves that allow the supply of one USD for every token redeemed.
But after the failure of the TerraUSD stablecoin, regulators became uneasy about stablecoins, especially the algorithmic version.
According to the Australian governor therefore private tokens would be more efficient and innovative and therefore central banks should focus on those, also because state digital currency projects are very expensive projects.
But things change quickly and even radically, so much so that the Australian Central Bank has confirmed its interest in creating a digital version of its own currency.
In fact, the RBA has announced that it and the Digital Finance Cooperative Research Centre (DFCRC) will collaborate on preliminary studies into the issuance of a CBDC.
The programme will run for 12 months and the joint effort aims to determine the economic advantages of launching a digital currency, while considering the potential disadvantages of doing so.
“This project represents an important step forward in our research on CBDC,” said Michele Bullock, deputy governor of the RBA. “We look forward to engaging with a wide range of industry stakeholders to better understand the potential benefits a CBDC could bring to Australia.”
During the programme, a key role will be played by industry participants who, based on their experience, will be able to suggest, or even develop, specific use cases that demonstrate how a CBDC could be used to provide innovative and value-added payment and settlements services to households and businesses.
The RBA and the DFCRC will have the authority to select use cases to participate in the pilot project. The Australian Treasury will also play a role as a steering committee member, based on its previous research into the possibility of a CBDC.
Australia, by its actions, is trying to get ahead in digital projects and is always in the top five most crypto friendly countries.