A senior Reserve Bank of Australia official claimed it was exploring a future with tokenized money and CBDC use cases in the financial system.
CBDC use cases are in different stages of experiments by central banks worldwide. The Reserve Bank of Australia (RBA) has also had its share with central bank digital currencies (CBDCs). Its active CBDC pilot projects have become popular, leading the way for other central banks. Assistant Governor of RBA, Brad Jones, spoke of their activities recently. However, his speech mainly concentrated on the possibilities of tokenized money.
He touched upon CBDC use cases while talking about the tokenization of assets in a traditional financial system. Jones’s speech also mentioned the current usage and potential of stablecoins. According to the RBA official, strongly backed stablecoins could be used to settle tokenized transactions. However, he said enough regulatory guidelines for private stablecoins were unavailable.
Jones mentioned a possible CBDC use case was having the digital currencies in tokenized deposits. “But given deposits issued by a range of banks are already widely exchanged and settled (at par) across the central bank balance sheet, the introduction of tokenized bank deposits would represent a minor change to current practice,” he said. He explained how a tokenized deposit transfer would transfer wholesale CBDC balances between two parties.
He went on to share important findings from RBA’s projects. Some of them included the value additions by CBDCs in wholesale payments. Jones stated digital currencies could also enable atomic settlements in asset markets that go for tokenization.
He went on to highlight how applied research was necessary for designs for new ledgers. On the other hand, he said CBDCs had scope to complement private digital money rather than replacing it.
The central banker also dwelled on some hypothetical scenarios for the future of Australia’s markets with tokenization.