Private investor interest in cryptocurrencies beyond bitcoin is taking off and Facebook’s proposed stablecoin, Diem, which will be pegged to the US dollar, is expected to launch this calendar year. This project forces central banks to consider issuing a digital form of their banknotes.
The Reserve Bank has experimented with a “central bank digital currency” in wholesale markets alongside CBA and NAB and is due to report on the project next month. He is skeptical of digital currencies from retail central banks or CBDCs, despite local blockchain developers requesting a review of a digital Australian dollar since at least mid-2017.
Senate Select Committee on Australia as a Tech and Financial Center, chaired by Liberal Senator Andrew Bragg, accepts submissions until end of month on local crypto policy, including regulatory treatment of stablecoins .
Last week, the Bank of England said it had not made a decision on issuing a CBDC, but said it was “actively exploring the opportunities and risks of doing so.” Its discussion paper said, “When combined with innovations such as programmable money and micro-payments, a CBDC can increase the utility of central bank money over cash. And it could support a resilient, innovative and competitive payments landscape. “
But the Bank of England wants payments based on stablecoins to be regulated to standards equivalent to those applied to traditional payments, given that trust in payment systems is a critical backbone of the economy.
“The bank is not seeking to preserve the status quo or any particular business model,” the Bank of England said last week. “On the contrary, the bank seeks to ensure that financial innovations, including new forms of digital currency, do not hamper its ability to maintain monetary and financial stability.”