The Reserve Bank of Australia (RBA) recently conducted a study to assess the public’s interest in a retail central bank digital currency (CBDC). The study focused on two key factors: the willingness to pay for the use of CBDC in a digital wallet and the potential privacy benefits of CBDC.
The RBA described its hypothetical CBDC as a digital currency that is even safer and more private than commercial bank deposits. To evaluate public valuations, the RBA conducted a discrete choice experiment, which involved assessing the value of goods without markets.
The study considered fees for privacy and safety options up to 5 Australian dollars (AUD), which is approximately $3 US dollars. It stated that users paying 5 AUD per year would generate around 100 million AUD in fees. However, this amount is not significant enough to outweigh other considerations relevant to the decision of issuing a CBDC.
One of the key advantages of a CBDC is its lack of credit risk, which is inherent in bank deposits. Banks can fail, but a CBDC eliminates this risk. Using data from 2022, the RBA demonstrated that people were not willing to hold an account with the RBA instead of a commercial bank. In fact, they were willing to pay less than one Australian dollar per year to avoid it.
The study also noted that public resistance to CBDC could influence these findings. The survey assumed a disintermediated system where the RBA would open accounts for the public. However, most existing and trial CBDCs are intermediated and use the services of financial institutions. Some policymakers expect to design an intermediated CBDC, which would offer different privacy options.
Assessing privacy preferences was more complex. While previous research has indicated that people highly value privacy, they often overlook privacy measures in practice, making it difficult to assess its true value. The results of the study revealed a strong preference for sharing information with the financial crime authority and a commercial bank rather than with the RBA. This preference was valued at approximately 5 AUD more.
In conclusion, the study found little public support for a retail CBDC. The RBA has conducted several previous studies on CBDC, most of which have reached positive conclusions. However, those studies primarily focused on wholesale CBDC use cases.