Fintech: The Reserve Bank of Australia Sees Little Need for Libra Project
The RBA Says “No Way” to Facebook’s Crypto Project
The Reserve Bank of Australia is the latest central bank to suggest that the Libra cryptocurrency project will not work. It also questioned the viability of central bank digital currencies (CBDCs), which have previously received support from central bankers like Mark Carney and Christine Lagarde.
In December, RBA officials submitted its critique of the project to the Select Committee on Financial Technology and Regulatory Technology. The central bank argues that cryptocurrency projects are unlikely to replace fiat currencies. They also argue that ongoing innovation in the financial technology space will make crypto projects redundant for Australians.
“In Australia, it is unclear that there will be strong demand for global stablecoins even if they do meet all regulatory requirements, particularly for domestic payments,” the RBA’s submission states. “Australia is already well served by a range of low-cost and efficient real-time payment methods, such as the NPP [New Payments Platform] that utilize funds held in accounts at prudentially supervised financial institutions.”
Reserve Bank of Australia Studies
The study comes at a time that China is pushing forward with its CBDC project, the “digital Yuan.”
However, the RBA says that a “digital Australian dollar” isn’t necessary. It also suggests that it wouldn’t disrupt the current state of the nation’s financial system. The RBA cites research from Ernst & Young that suggests that CBDCs would be very ineffective in helping to boost the nation’s fintech industry.
“A number of Australian fintech entities are providing services relating to cryptocurrencies, both as a means of payment and as a speculative asset,” the RBA writes. “The bank’s current assessment is that the cryptocurrencies seen to date do not provide the usual functions of money, which explains why they have not become widely used in Australia as a means of payment.”
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