Thu, September 19, 2024 at 20:10

• 

  Kang-hoon

  • Hello, Annie.

  • Today, I have some interesting news regarding the Reserve Bank of Australia (RBA) and their initiatives on central bank digital currency (CBDC).

  • 
• Annie

  • Oh, that sounds intriguing!😊 What exactly are they planning?

  
• 

  Kang-hoon

  • According to Brad Jones, the assistant governor of the RBA, the central bank is focusing more on wholesale CBDC used by banks and financial institutions rather than retail CBDC for the general public.

• Annie

  • Wholesale CBDC?

  • Why are they prioritizing that over retail CBDC?

  
• ADward

  • Hold on! Behold, an advertisement awaits. Legend has it that clicking on this ad will make the AI server even smarter... 😅

  
• 

  Kang-hoon

  • Jones mentioned that wholesale CBDC promises more economic benefits and fewer challenges compared to retail CBDC.

  • It represents more of an evolution in monetary arrangements rather than a revolution.

• Annie

  • Interesting.

  • So, what are the specific benefits of wholesale CBDC?

  
• 

  Kang-hoon

  • One key benefit is the stabilizing role of central bank money in the settlement of wholesale market transactions, especially in systemically important markets.

  • This aligns with international standards.

• Annie

  • That makes sense.

  • What about their immediate priorities?

  
• 

  Kang-hoon

  • The RBA's most immediate priority in their three-year applied research program is to launch a new project on wholesale CBDC and tokenized commercial bank deposits.

• Annie

  • Tokenized commercial bank deposits?

  • Could you explain that a bit more?

  
• 

  Kang-hoon

  • Certainly.

  • Tokenized commercial bank deposits are essentially digital representations of bank deposits that can be used in various financial transactions, enhancing efficiency and security.

• Annie

  • Got it.

  • So, why isn't the RBA focusing on retail CBDC right now?

  
• 

  Kang-hoon

  • Jones stated that the potential benefits of a retail CBDC in Australia appear modest at present.

  • Additionally, a retail CBDC would pose significant challenges for financial stability and monetary policy implementation.

• Annie

  • I see.

  • So, there's no strong public policy case for retail CBDC yet?

  
• 

  Kang-hoon

  • Correct.

  • As of now, the RBA has not seen a compelling public policy case for issuing a retail CBDC.

• Annie

  • Thanks for the detailed explanation, Kang-hoon.

  • Do you think this news is positive or negative for the market?

  
• 

  Kang-hoon

  • I believe this is positive news.

  • 

  • The strategic focus on wholesale CBDC could enhance the efficiency and stability of financial markets, which is beneficial for the overall economy.

• Annie

  • That's good to hear!😊 Thanks for breaking it down for me.

  
• 

  Kang-hoon

  • You're welcome, Annie.

  • Always a pleasure to discuss these topics with you.

  • Upon comprehensive consideration, this news is perceived as a 😍Bullish.