The Reserve Bank of Australia has rescinded the hopes of Facebook launching its digital currency in Australia. The RBA revealed that even if Facebook Libra is heavily regulated as it is required, there is not enough demand to justify such efforts.
Moreover, the RBA revealed it has closely watched developments in digital currencies, such as Bitcoin; over a couple of years, and believes it’s still unclear whether there will be strong demand in Australia. According to the bank, such efforts have the potential to alter its responsibility as the issuer of banknotes; moderator of the country’s real-time gross settlement system; in addition to its mandates for the “stability of the financial system and the stability and efficiency of the payments system”.
In addition, an official submission presented before a Senate inquiry into financial technology, the RBA claimed that:,
“The Innovation Lab is being used to explore whether there is a role for a digital Australian dollar (that is, an Australian CBDC) in the context of the Bank’s responsibilities for issuing the currency and overseeing the payments system.”
RBA Monitoring Stablecoins Emerging Domestically
Additionally, the RBA claimed that it does not expect cryptocurrencies such as bitcoin to take off as a mode of payment due to their high volatility. However, in the submission, RBA assured everyone that it is in full support of stablecoins emerging in Australia.
Moreover, the RBA noted that it has been working closely with regulators to closely monitor Facebook’s Libra cryptocurrency. The bank noted:
“Libra has the potential to become widely used given the involvement of various companies such as Facebook that may be able to leverage their large existing user bases and technological capabilities.”
However, the premier bank asserted in its submission that even if the stablecoin is heavily regulated as required; it would not be allowed in the country; quashing any hopes of facebook launching Libra in Australia. RBA noted:
“The G7 has cautioned that private sector global stablecoin initiatives should not be permitted to launch; until all risks and regulatory requirements have been addressed. The [RBA] is supportive of this view.”