Australia Shifts Focus to Wholesale CBDC, Leaving Retail Options Behind

Australia's central bank has decided to prioritize the development of a wholesale central bank digital currency (CBDC) over a retail version.

This shift was announced by Brad Jones, the Reserve Bank of Australia’s Financial System Assistant Governor, during a fintech conference in Melbourne.

A retail CBDC would be used by the general public for everyday transactions, while a wholesale CBDC would facilitate transactions between banks and financial institutions, such as cross-border payments.

Jones noted that the economic benefits and challenges associated with a wholesale CBDC appear more favorable compared to a retail option, which might cause issues like higher borrowing costs and complicate monetary policy.

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The Reserve Bank of Australia is also embarking on a three-year research initiative called Project Acacia. This project will explore the future of digital money, focusing on tokenized commercial bank deposits and advancements in blockchain technology, such as programmable and atomic settlement capabilities.

This new direction follows Australia’s earlier CBDC pilot program, which included collaborations with firms like Mastercard and ANZ. While many central banks are exploring CBDCs, most are leaning towards wholesale implementations rather than retail ones.

Currently, only a few countries, including the Bahamas and Nigeria, have introduced retail CBDCs to the public.

Alexander Stefanov