Australia's central bank believes CBDC is 'still years away', delays eAUD digital currency launch amid unresolved issues

Australia's central bank, the Reserve Bank of Australia (RBA), has announced a delay in making a decision regarding a Central Bank Digital Currency (CBDC). This decision comes in the wake of several unresolved issues that emerged during the conclusion of the pilot project. The RBA stated that due to these outstanding concerns, it is likely to be several years before any decision on a CBDC is reached.

A complement to private sector innovation

The report released by the RBA suggests that a CBDC could be seen as an "enabling complement" to private sector innovations rather than a substitute for them. The primary focus of the pilot project was to explore how a CBDC could enhance the functionality of the payments system within the industry. It did not aim to provide a comprehensive assessment of the costs, benefits, risks, and other implications of introducing a CBDC.

Challenges & findings

While the research indicated that an Australian CBDC could potentially support offline electronic payments and enable more complex and cost-effective transactions, it also highlighted significant challenges. These include issues related to legal, regulatory, technical, and operational aspects. Affordable and secure solutions for key management, especially for companies not operating on other Distributed Ledger Technology (DLT) networks, were identified as a hurdle.

Moreover, integrating a CBDC platform with industry use case applications proved to be challenging, with implications for potential deployment models. Privacy concerns, a global issue associated with CBDCs, remained unanswered in the Australian context. Designing solutions that effectively balance privacy and data sharing needs on a single CBDC platform was deemed complex and warranting further research.

A prudent approach to CBDC

Australia's decision to delay the CBDC rollout underscores the cautious approach taken by central banks worldwide in adopting digital currencies. While CBDCs hold promise in revolutionizing the financial landscape, the unresolved challenges and privacy considerations necessitate thorough examination before implementation.