The man whose signature appears on every Australian note, Reserve Bank governor Philip Lowe, has signaled he and his successors may soon be turning digital. In an address to G20 central bankers, Dr. Lowe has given his clearest indication yet that the next step in the evolution of money is about to take place and it will require people to update their leather purses and wallets to cards or phones.
Central banks around the world are examining the concept of central bank digital currencies (CBDCs). They are digital versions of a national currency and are financially backed by the country’s central bank. The Bahamas has a CBDC called the Sand while China’s central bank is trialing the e-yuan. Athletes at this month’s Beijing Winter Olympics were able to use the virtual currency at sporting venues across the city.
While Australia’s payment system has undergone sweeping changes in recent years amid a boom in tap-and-go transactions and buy now, pay later services such as Afterpay, the RBA has moved slowly in the digital currency area. In December, it completed its Project Atom research into wholesale CBDCs, finding such a currency could improve efficiency and innovation across financial market transactions.
Dr. Lowe said what societies used as money was shaped by technology. Silver and gold had given way to paper, to paper notes, and now in Australia’s case to polymer notes, which all feature the signature of the RBA governor.
He said money changed as technology evolved and it appeared the next step was about to occur. “We can’t be sure what the next innovation in money will be, but I think there’s a fair chance it will be a form of digital token that sits in a digital wallet or a digital device,” he said. READ MORE
