Australia sees greater benefits in wholesale CBDC, limits retail interest

The Reserve Bank of Australia has announced that it is moving towards developing wholesale CBDC, stating that it has greater economic benefits and fewer complications compared to the retail version.

The Reserve Bank of Australia appears to be prioritizing wholesale CBDC development over retail, arguing that it means greater economic benefits and fewer challenges for the country’s financial system.

RBA deputy governor Brad Jones highlighted the RBA’s focus on wholesale CBDC in his conference speech on September 18, viewing it as an “evolutionary rather than revolutionary” contribution to existing monetary systems, particularly in the context of systemically important markets.

“[…] “Unlike a retail CBDC that would be issued for public use, a wholesale CBDC would represent an evolution rather than a revolution in our monetary arrangements.”

Brad Jones

Jones announced a three-year research initiative on digital currency to prioritize a full CBDC, and outlined immediate plans to collaborate with the industry on such central bank digital currencies and tokenized commercial bank deposits. The central bank official said the project would explore new accounting technologies and concepts such as programmability and atomic settlement to assess potential gains for Australia’s financial infrastructure.

Types of cash payments by country since 2010 | Source: Reserve Bank of Australia

In contrast, the RBA sees the benefits of a retail CBDC as “currently modest or uncertain” and notes that it would constitute a “significant change” to Australia’s financial regulations. Jones highlighted that many of the international arguments supporting retail CBDCs are less relevant to Australia or “currently uncertain, relative to the challenges it would present”.

While the RBA is open to exploring a retail CBDC in the future, Jones noted that any move in this direction would require a public policy case and “legislative change” consistent with international norms. “Therefore, the Australian Government will ultimately decide whether to introduce a retail CBDC,” he said, underlining the need for close coordination with the Treasury and other government bodies.