The future could be one wherein the Australian dollar could cease to exist through physical notes and coins to become digital instead.
In a recent speech given by Tony Richards, head of the Reserve Bank of Australia (RBA)’s payments policy department, he revealed that the RBA had kept a watchful eye on the growth in demand for digital currencies such as Bitcoin, to speculate and believe that Australia will, in the future, have a central-bank-issued digital currency.
In a report by the Sydney Morning Herald today, the RBA sees a future wherein digital dollars will circulate and co-exist alongside banknotes and other forms of Australia’s national currency, including coins.
While Richards stated that the central bank isn’t “actively” considering the introduction of a digital dollar in Australia just yet, the executive confirmed that it’s possible that the bank authorities will produce and distribute such a currency in the future.
According to the publication, Richards stated:
A plausible model would be that issuance would be by the central bank, with distribution and transaction verification by authorized entities, which might or might not include existing financial institutions.
Central Banks’ Interest in Digital Currency Issuance
The news follows other central banks of countries who have already explored and revealed the possibility of digital versions of their currencies. They include the Bank of England, the People’s Bank of China and the Bank of Canada, all of whom were pointed out by Richards, who added:
Both the Bank of England and Bank of Canada have indicated that they are undertaking research in this area. And a recent announcement from the People’s Bank of China indicated that it has plans for digital currency issuance, though few specifics were provided.
He further revealed that the RBA will assess the upsides and drawbacks of digital currencies before drawing plans of issuance.
The Bank will be interested to see what proves to be possible and what proves to be problematic, as countries consider going down the path of digital currency issuance.
In late 2014, the Bank of Canada’s senior deputy governor spoke about the possibility of the central bank issuing its own digital currency, like bitcoin. The UK has long claimed to be a welcoming destination for Fintech while the Bank of England published an extensive research paper [PDF] pouring over the value and impact of a technology like Bitcoin.
More recently, the People’s Bank of China (PBOC), as China’s central bank spoke about plans to issue its own digital currency “as soon as possible.”
A Slow Death for Cheques
In a nod toward digitization of transactions, Richards revealed that cheques are in continual decline, with a steep drop expected in 2018 when a new payments system called New Payments Platform (NPP) is introduced.
“With more and more older households now using the internet, their use of cheques is likely to continue falling,” opined Richards.
The NPP, when introduced will provide Australian businesses and consumers with a quick, versatile, data-rich payment system that will facilitate its users during everyday payments.
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