In its submission to the digital assets bill 2023 inquiry, the Australian central bank restated the critical input that stablecoins would play in the economy. The May submission ruled out deciding on the central bank’s digital currency. Nevertheless, the report admits the Reserve Bank Australia (RBA) is actively pursuing CBDC research.
Reserve Bank of Australia Optimistic of Stablecoins’ Critical Input
The submission by the bank sought to inform the ongoing inquiry for the digital assets bill. The proposed bill seeks to harmonize the regulation of crypto services, exchanges, and stablecoins issuance.
The submission by the central banks appears heavily leaning towards stablecoins that the RBA considers to have the inherent potential of breaking dependency on fiat currency. Consequently, RBA supports formulating a strong, relevant, and transparent framework.
Minimal Utilization of Stablecoin in Australia
The bank admitted that stablecoin activity was relatively minimal to date. Nonetheless, establishing the requisite legal infrastructure would facilitate stablecoins to play a prominent role in Australia’s financial system.
RBA submission restates its support for regulatory development, whose aim is becoming the catalyst supporting stablecoin innovation without compromising on the investor’s and users’ safeguards.
Despite admitting the stablecoin activity remains minimal, RBA cited other jurisdictions worldwide where the regulators are mulling frameworks that would propel stablecoins into broader utilization for making payments.
The RBA submission clarified its stance on the CBDCs, dismissing speculations of deciding on the digital Australian dollar implementation. The central bank affirmed devoting its infrastructure to research CBDCs viability in Australia actively.
Caribbean Countries Dominate in CBDCs and Stablecoin Usage
RBA lauded the devotion of its executives to research stablecoin user cases. In particular, it cited that most nations leading in CBDCs issuance are overwhelmingly within the Caribbean region. RBA observed that the nations are majorly embracing CBDCs to improve the efficiency of running domestic payment systems.
RBA forecasts stablecoin stability where CBDCs’ future user base would exceed those residing in the country of origin. The central bank submitted that CBDCS has the potential to realize utilization by nonresidents and outside the issuing jurisdictions just as the fiat currency.
RBA to Collect Data from Banks and Non-deposit Taking Institutions
RBA delved into the possibility of Australians accessing and using foreign CBDCs. Its insight into the proposed approach to collecting actionable information regarding foreign CDBCs use would involve authorized deposit-taking institutions (ADIs). The process would involve obligating credit unions and banks to collect data.
RBA restated its support for transparency and utilization of payment methods across Australia. It observed that promoting efficiency and competitiveness within the payment systems would involve regular data collection. Primarily, RBA lauded the regular data collection and publishing from commercial banks constituting significant retail payment statistics.
RBA is set to leverage the provisions of the Payment Systems Regulation Act (1998) to ease data collection from participants. It also acknowledged that the visibility of foreign CBDCs usage among Australian residents relies on design features.
Data collection should extend beyond ADIs. The collection should also consider services offered by non-ADI entities. The presence of digital wallet services offered by institutions such as financial tech and foreign central banks obligates RBA to cast the data collection net wider. By doing so, RBA would have better visibility on the foreign CBDcs usage by Australians.
Government-Issued Digital Currency Garners Steam Globally
The RBA submission to the inquiry on digital assets regulation offers neutrality from other central banks’ tone. It contradicts the pronouncement by Kenya’s central bank warning of fading CBDCs’ allure on the global stage.
While RBA failed to admit the stablecoin and CBDCs are completely sold projects. However, it acknowledged that advanced economies have recently initiated research to assess the potential of government-issued digital currency. RBA cited the recent partnership featuring the Fed, European Central Bank, Bank of England, and Bank of Japan to write a paper on CBDCs jointly.
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