Australian Central Bank says “Nah, mate” to Facebook’s Libra
In a submission to the Senate Select Committee on Financial Technology and Regulatory Technology, the Australian central bank outlined why it does not believe that Australia should allow Libra to launch within its borders.
"The G7 [...] noted that such proposals raise significant legal and regulatory risks, including consumer/investor protection, data privacy, monetary policy, and financial stability. Accordingly, it cautioned that private sector global stablecoin initiatives should not be permitted to launch until all risks and regulatory requirements have been addressed. The Bank is supportive of this view," the central bank stated in its submission.
In other words, the central bank does not believe Libra should be allowed to launch locally unless the potential risks of a corporate-issued, global digital currency have been fully analyzed and there are strict regulations in place to govern such a payment system.
RBA questions the demand for Libra down under
In addition to suggesting a firm regulatory framework under which Libra and similar corporate-issued stablecoins should operate under, the RBA stated that it does not believe there would be enough demand for the currency in Australia.
"In Australia, it is unclear that there will be a strong demand for global stablecoins even if they do meet all regulatory requirements, particularly for domestic payments," the RBA wrote.
The central bank believes that Australians are already well-served by existing, regulated payment systems that offer efficient, low-cost payments to the consumer.
The RBA recognizes that there is room for improvement in the cross-border payments market. However, the central bank believes that a number of recent digital, non-bank entrants enables Australians to make cheaper and faster international money transfers.
Finally, the RBA also stated that it does not believe that the introduction of a central bank digital currency (CBDC) makes sense for Australian consumers at this point in time. It does, however, consider it a possibility for the wholesale market.
"The Bank is not currently considering a CBDC for retail use […]. There would be little demand by households for such an asset, given that they already have good access to digital money in the form of commercial bank deposits," the central bank stated.
“ [However, the RBA] notes the availability of a wholesale settlement token based on distributed ledger technology could allow payment and settlement processes to become more integrated with other business processes,” the bank concluded.
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Alex Lielacher, Khareem Sudlow