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Australia’s Central Bank is prioritising the development and implementation of a wholesale Central Bank Digital Currency (CBDC) over a retail variant. This focus is driven by the perceived benefits and potential the wholesale CBDC presents for international trade. Australia continues to contribute significantly to the global CBDC discourse, particularly by understanding its implications for the country’s economic structure.
The Reserve Bank of Australia (RBA) has underscored the importance of digital currency in the modern world. Digitalization of traditional banking operations and the rise of cryptocurrencies have greatly influenced the need for a state-backed digital currency, leading to competitively enhanced financial systems. However, the RBA has decided to venture into the wholesale variant of the technology first, citing it as more beneficial in terms of international trade potential.
Wholesale CBDC refers to a restricted digital currency system that’s often not accessible to the general public. Instead, it’s limited to financial institutions and participates in high value and large-scale transactions typical of interbank transfers. Contrastingly, retail CBDCs, which the RBA does not prioritise, would have been available for public usage, similar to how the general public uses fiat currency.
In spite of Australia’s willingness to prioritise a wholesale CBDC, the financial institution stressed that it is not neglecting the retail CBDC aspect. Instead, they clarify that their focus is more about managing risk and prioritising the global perspective rather than focusing on individual consumers. Therefore, the decision to prioritise the wholesale CBDC does not entirely rule out a potential retail CBDC in the future, although for the moment, enhancing international trade is considered a primary objective.
Source: CoinDesk
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