RBA governor cool on electronic dollar; calls bitcoin 'speculative mania'

RBA governor cool on electronic dollar; calls bitcoin 'speculative mania'

The Reserve Bank of Australia has no plans to issue electronic dollar banknotes, says governor Philip Lowe in a speech in which he also dismisses the current fascination with bitcoin as a "speculative mania".

The concept of central bank digital currencies has been gathering momentum recently, with authorities in Canada, the US and UK all investigating the potential benefits and pitfalls.

While the use of cash is falling quickly in Australia, Lowe says that the case for adding an electronic form of banknotes to the payments mix "has not been established, even if it were technologically feasible".

And, he told an audience at a payments conference, Australia is not alone, with few of his peers around the world seeing e-banknotes on the horizon.

In Australia, the case is undermined by the imminent New Payments Platform, which will soon bring the kind of 24/7 instant payments already enjoyed in countries such as the UK.

Lowe also made clear that he does not see a case for the RBA offering every Australian a bank account for the purposes of making payments, arguing that it would change the entire banking system "in a way that would not promote the public interest".

As for issuing dollars on the blockchain for use with limited private systems, a convincing case has yet to be made, although it could be in the future if it could prove to offer more efficient, lower-cost business processes and payments.

Lowe also used his speech to hit out at the current bitcoin mania, saying that with its volatile nature and high transaction costs, it seems suited mainly to the illegal economy.

"So the current fascination with these currencies feels more like a speculative mania than it has to do with their use as an efficient and convenient form of electronic payment."

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