I’ve been keeping a very close eye on the Reserve Bank’s moves toward a digital future. During this exchange with Governor Bullock, I pressed for clarity on exactly where they are headed with Central Bank Digital Currencies (CBDC) and the “unified digital currency” the big banks have been whispering about.
I asked about developments in both domestic and international settlements. The Governor admitted that while they ran a pilot back in 2023, the focus has shifted. They aren’t looking at a “retail CBDC” right now, which would be digital cash for everyday shopping. Instead, their focus is firmly on looking at how to settle “tokenised assets.”
Tokenised financial products, also called asset tokens, are a way to turn traditional money-related things into digital versions that live on blockchain technology, the same as that used by Bitcoin and Ethereum. These could include shares, real estate, artworks and precious metals.
Normally these are hard to buy and/or sell quickly, especially in small amounts, and often involve lots of paperwork, middlemen and high minimum investments. Tokenisation changes that by creating a digital token that acts like a certificate of ownership for a piece (or all) of that real thing. The token is recorded on a blockchain, which is theoretically secure.
You would be able to buy a share of a home, business, art or precious metals within minutes, allowing small investments to grow your savings more than bank interest would do.
Note: This technology is not there yet! The RBA is scoping it out – as many institutions are.
I will continue to monitor these experiments to ensure that this doesn’t come at the cost of our financial privacy or sovereignty.
— Senate Estimates
Transcript
Senator ROBERTS: It has been six months since the new board arrangements started. How is that working so far?
Ms Bullock: I think it is working well. The monetary policy board now has more time to focus on monetary policy decisions. The governance board, I think, is adding significant value in helping me. I was the sole accountable authority for the institution. Now the governance board is the accountable authority. My own view is that the people on that board are adding significant value.
Senator ROBERTS: Thank you. Is there going to be a review of these changes?
Ms Bullock: The governance board is going to do a report, I think, by the end of the year. It is going to talk about all of the recommendations from the review, where we’re at with meeting them and what our plans are to meet those that we haven’t yet.
Senator ROBERTS: Thank you. You actually have three boards—the monetary board, the governance board and the payment system board. Have there been any developments coming from the work the Reserve Bank is doing on electronic payment systems, whether that’s some form of central bank digital currency, which I think your predecessor acknowledged was done, or a unified digital currency the banks have been talking about? Is anything happening there in either the domestic market or international settlements?
Ms Bullock: A few things. We have done some experimentation. Back in 2023—we might have talked about this before—we did a pilot of a central bank digital currency. We asked people to come with use cases and so on. The main headline out of that was that the predominant use cases were not what I would call retail CBDCs. It wasn’t about putting central bank digital currencies in the hands of you and me and using them at shops. It wasn’t about that. It was about wholesale digital currencies—how you can potentially use central bank digital currencies in markets for wholesale assets. We’ve got another experiment going on now which is looking specifically at that issue. If you tokenise assets—you put them on a chain, a ledger—how can you use not only central bank digital currencies but stable coins, tokenised bank deposits and standard payment systems to settle tokenised asset sales. That is the current experiment that is going on. We are working with a number of organisations to do that. That will give us a bit more information about the sorts of issues that might arise in moving towards tokenised asset ledgers.
