Australia to Prioritize Wholesale CBDC Over Retail

• Australia's central bank said it will focus on a wholesale central bank digital currency.
• A wholesale CBDC offers more promising benefits and fewer challenges than a retail version, Brad Jones, an assistant governor, said.

The Reserve Bank of Australia said it will prioritize work on a wholesale central bank digital currency over a retail version.

A wholesale CBDC is a digital token issued by central banks for use by banks and financial institutions, whereas a retail version is aimed at consumers and everyday transactions. Countries around the world have been examining CBDCs, the Bank for International Settlements found, including all of the G20 nations.

"The RBA is making a strategic commitment to prioritise its work agenda on wholesale digital money and infrastructure – including wholesale CBDC," Brad Jones, assistant governor for the financial system, said in a statement on Wednesday. "At the present time, we assess the potential benefits as more promising, and the challenges less problematic, for wholesale CBDC compared to a retail CBDC."

Australia has been exploring the CBDC use cases for several years. In a Wednesday report, the central bank said it hadn't been able to identify a clear public benefit for a retail CBDC because citizens are well served by the current retail payments system.

"Nonetheless, the RBA and Treasury remain open to the possibility that this assessment could change over time as potential benefits and costs are better understood, both internationally and in a domestic context," the statement said.

The country is committing to a three-year applied research program on the future of digital money in Australia. Next month, the central bank will launch the public phase of Project Acacia, which will explore opportunities to improve wholesale markets using central bank money through tokenization and new settlement infrastructure, the report said.

"Our most immediate priority is to launch a new project with industry on wholesale CBDC and tokenized commercial bank deposits," Jones said in a speech. "The focus will be on understanding how new ledger arrangements and concepts like ‘programmability’ and ‘atomic settlement’ in tokenised markets could unlock benefits for the Australian financial system and wider economy."

The RBA and Treasury will also undertake some form of public engagement on retail CBDC in 2025 and carry out further research and experimentation in the coming years. A further paper from the RBA and Treasury will be released in 2027 that will examine the merits and potential form of a retail CBDC.