The Assistant Governor emphasized the importance of CBDCs as tokenized bank deposits that could offer a more secure and robust path for digital transactions.
The Reserve Bank of Australia (RBA) is actively considering creating a central bank digital currency (CBDC). This could be a transformative step for the future of money and financial transactions. Brad Jones, RBA’s Assistant Governor for the Financial System, stated in a speech titled ‘A Tokenized Future for the Australian Financial System,’ that the future of money is likely digital and that CBDCs and tokenization could be an important part of the future monetary system.
CBDCs and Tokenized Deposits
Jones expressed that CBDCs, in the form of tokenized bank deposits, could offer a more reliable and robust path for digital transactions.
According to Jones, this approach would require only minor adjustments to current banking practices, as deposits issued by various banks are already widely traded across the central bank’s balance sheet.
Transactions with tokenized deposits will essentially operate seamlessly through the exchange settlement between the paying and receiving banks or the transfer of wholesale CBDC balances.
Jones also shared significant findings from the central bank’s pilot CBDC program. These findings illuminated many areas where CBDCs could offer significant value, particularly in wholesale payments.
Stablecoins Could Be Risky
Jones emphasized that digital tokens, i.e., CBDCs and stablecoins, hold a significant place in today’s financial world. He pointed out that stablecoins issued by private companies are inherently risky due to inadequate regulatory oversight.
On the other hand, CBDCs will be issued and backed by central banks, the trusted institutions that govern the world’s monetary system.
However, he also acknowledged that if well-regulated financial institutions issue stablecoins and they are backed by quality assets like government bonds or central bank reserves, they could have great potential.