The Reserve Bank of Australia’s latest Quarterly Bulletin has rejected the idea of issuing a digital currency for Australia. Long held up as the future of the ‘physical’ currency, a digital currency is a verified token or account that could replace actual notes and coins without a bank or a card company involved. It’s real money online, issued by the RBA, worth exactly what real notes and coins are worth, with no bank account or card involved.

And it’s not going to happen any time soon. In what is a major disappointment for some, the RBA has decided there is no need for a digital Australian currency because the actual Australian currency – notes and coins are working so well, alongside the New Payments Platform and the existing payments architecture.

“At present there does not seem to be a strong public policy case for issuance [of a central bank digital currency] in Australia” said the RBA.

“Australian banknotes, which are a liability of the Reserve Bank, are a safe, accessible and widely accepted method of payment.

“Even though the use of cash for transactions is declining, cash is still widely available and accepted as a means of payment,” said the RBA Bulletin.

A record high amount of cash (as a ratio to GDP) is now in circulation. The RBA also reports that:

“The total value of banknotes and coins in circulation is currently around $89 billion; as a ratio to annualised GDP, currency on issue in the June quarter was at the highest level seen in the period since the introduction of decimal currency in 1966.”

surge in ATM withdrawals, but not a spike in the average value of transactions, in the three months to July shows a strong vote of confidence by Aussies in cash as a payment tool.

“This is a massive vote of confidence in the future of the cash economy,” said Tim Wildash, CEO of Next Payments in a media release I wrote today.

“Nevertheless, our right to use and access cash is under threat, the ATM industry has called for government to protect cash.”

What is a central bank digital currency?

An online dollar is a digital replacement for a physical RBA banknote or coin and carries the same value.

Now, consumers can deposit their cash in a bank account or hold e-Money like PayPal and cryptocurrencies like Bitcoin if they want to transact electronically. They can withdraw cash back out of their bank account or sell their cryptocurrencies to get their ‘real’ money back, but while their cash is deposited or spent on crypto, it is at risk (possibly very small).

A central bank digital currency (CDBC) could be spent or saved and would presumably be relatively stable in value (unlike cryptocurrencies) therefore, like banknotes, could be popular with consumers and hoarders alike. A digital currency could take the form of an online verified token system or an account system, or a hybrid of both account and token.

The RBA says it has concluded “the public policy case for issuing a general purpose CBDC in Australia is still to be made.

“Even though the use of cash for transactions is declining, cash is still widely available and accepted as a means of payment.

“Households and businesses are also well served by a modern, efficient and resilient payment system that has undergone significant innovation in recent years, including the introduction of the New Payments Platform, a new real-time, 24/7 and data-rich electronic payments system.

“However, … the Bank will continue to consider the case for a CBDC, including how it might be designed, the various policy implications and the future conditions in which significant demand for a CBDC might emerge.”

That means we’re putting this one on the shelf. At the back of the shelf.

All those people who have been predicting the death of cash and promoting the cashless economy need to sit down and look forward to a future with cash, private, reliable, physical cash. Thanks Cash Welcome.

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