MNI: RBA Lowe: Open To and Exploring Idea of AUD on Blockchain

By Sophia Rodrigues

     SYDNEY (MNI) - The Reserve Bank of Australia is open to the idea of issuing

Australian dollar using  blockchain technology for use with limited private

systems and is exploring such options, Governor Philip Lowe said Wednesday.

     The RBA is currently liaising closely with finance technology companies and

financial institutions and is also talking regularly with other central banks

that have tested distributed ledger technologies in some related contexts. 

     Lowe made the comments at the Australian Payment Summit 2017 in Sydney on

the topic "An eAUD."

     "A convincing case for issuing Australian dollars on the blockchain for use

with limited private systems has not yet been made. It is certainly possible

that this type of system could lead to more efficient, lower-cost business

processes and payments," Lowe said.

     "My working hypothesis here is that such a case could develop, although we

need to work through a range of complex operational and policy questions," he

added.

     Lowe said there is a need to better understand the potential efficiencies

for private business and why it would be preferable for such a settlement system

to be provided by the central bank rather than the private sector and why

privately issued tokens or files could not do the job. 

     "We would also need to understand why any efficiency improvement could not

be obtained by using the existing Exchange Settlement Accounts and the NPP (New

Payments Platform)," he said.

     The RBA also needs to understand whether and how risk in the financial

system would change as a result of such a system. As of now, it remains unclear

which way this could go, he said,

     "We are also currently working with some external entities to observe or

participate in proof-of-concepts similar to those of other central banks. So

this area remains a work in progress for us," he said.

--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com

[TOPICS: M$A$$$,M$L$$$,MT$$$$]