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The Reserve Bank of Australia and the Reserve Bank of New Zealand have both ruled out issuing offical cryptocurrencies in the near time. They warned on the dangers of financial instability from poor structures and verification processes.

Bitcoin Australia

The Central banks of Australia and New Zealand have often been considered innovators when it comes to currencies. The Australian polymer bank notes are considered the most durable and hardest to counterfeit by experts. Countries including Canada have their notes made by the RBA.

Many cryptocurrency experts were expecting the RBA to be one of the first to implement a digital currency. With the high number of thefts in the region, in South Korea and Japan the most notable it shouldn't be a surprise that they remain cautious.

Head of the Reserve Bank of Australia (RBA) payments policy, Tony Richards speaking in Sydney said that bitcoin and other cryptocurrencies had not proven their worth as reliable stores of value or means of payment after nine years. 

"Nine years after its launch and about five years since it entered the public consciousness, bitcoin continues to have structural flaws that make it unsuitable for many uses, many of which stem from its inefficient verification process,"  Richards said

He added that “Distributed ledger technology has got big implications for the future. But "The RBA had no plan for the time being to adopt any new electronic form of money for households. This he said was the intent of other central banks.

"Based on our interactions with our counterparts in other countries, it is also not front of mind for most other advanced economy central banks," Richards said.

 

Most Money is Already Digital

Richards said “most money is already ‘digital’ or electronic in form” with currency (hard cash in notes and coin) accounting for just 3.5 percent of “broad money” with cash use in the payments mix falling from 70 percent in 2007 to 37 percent nine years later.

Australian Transaction Breakdown

Over in New Zealand The Reserve Bank of New Zealand (RBNZ) deputy Governor Geoff Bascand  said "A breakdown in the financial system can cause enormous economic and social harm. We could not issue a digital currency if it might undermine financial stability,"

He did say the RBNZ  was open to exploring new technology but it was unclear whether a central bank digital currency will bring conclusive benefits. While digital currencies could make distribution of money safer and cheaper, they could increase the likelihood of bank runs during periods of financial instability if in times of financial stress, depositors can easily and remotely transfer large deposit holdings to a central bank digital currency, he said.

"The payments industry is dynamic, which is good. But the Reserve Bank must be a considered prospector in the exploration for digital currency benefits - we have New Zealand's currency and financial system at stake."

Most central banks are very wary of embracing cryptocurrencies and say they have no plans to issue their own digital money with the exception of Sweden, where the shift away from the use of cash is significantly more advanced than in other countries. Bitcoin prices themselves have fallen from a high over $20,000 to around $6000 as particpants worry over banking and governemnt authorities' movesto impose tighter regulation on cryptocurrencies.

Crypto Market Cap

The RBA however left a positive note for crypto users saying “Cryptocurrencies and distributed ledgers are fascinating developments both from a payments and a broader economic perspective,” Richards said. “The Reserve Bank will be continuing to study their implications and we are very interested in continuing to interact with entities, both large and small, that are active in this area.”

Source: RBA, RBNZ

From a Sunburnt Country...

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