Australia’s CBDC lead: CBDCs are not focused on resolving current issues

The executive leading Australia’s pilot project on central bank digital currencies (CBDCs) believes that while CBDCs may not currently address any existing problems, they could potentially provide solutions to future challenges that have not yet been anticipated. Dilip Rao, formerly of Ripple and currently heading Australia’s CBDC research initiative, expressed that a central bank-issued digital currency could be designed for use cases that have not yet been contemplated. Rao, who serves as the research program director at the Digital Finance Cooperative Research Centre, in collaboration with the Reserve Bank, is exploring various potential use cases for a CBDC. However, he acknowledged that the question of why individuals would want or need to use a CBDC still needs to be answered. One potential future use, according to Rao, could be the trading of tokenized assets by large institutions on marketplaces, where a CBDC could be preferred to mitigate risks. The CBDC pilot in Australia is currently investigating 14 potential use cases, and Rao explained that the forthcoming report on these tests will identify the ones that warrant further exploration. He emphasized that a CBDC may not be necessary in every use case and that people need to perceive its value for widespread adoption to occur. In Australia, one obstacle for a CBDC is the need for legislative changes that require public support. Rao stated that for these changes to pass through Parliament, politicians must be on board, necessitating extensive public consultation. This consultation would focus on addressing the problems that people want to be resolved, as politicians will not undertake actions that could cost them votes.