- T Filaret and M Bacina
Australia better hop to it to keep up with a Digital Euro in the race to CBDCs
In a global race to digitise national currencies, the EU has kept good on its earlier promises to explore implementing the CBDC, embracing the rapidly changing financial environment.
In an online policy panel held recently, the president of the European Central Bank, Christine Lagarde, stated that the results of the consultation the EU Central Bank would be ready in January 2021.
At that point in time we will make the decision as to whether or not we go forward with the digital euro... My hunch — but this is a decision that will be taken collectively — is that we might well go in that direction.
Lagarde estimated that the timeline for implementation would:
'...probably take us two, three, four years before it is launched'
Lagarde has been a long-term supporter of distributed ledger technologies and the implementation of CBDC. On April 10 2020, Lagarde estimated that the implementation of a CBDC would clearly 'shake the financial system'.
In a report released in November 2020 by Deutsche Bank titled 'What we must do to rebuild', Deutsche Bank has considered what is required to rebuild after the Coronavirus pandemic is to embrace CBDC to replace cash.
Deutsche Bank warned EU policymarkers about the risks of not devleoping their own digital currencies in response to China and Sweden's active progress in the field, cautioning that other countries may gain a 'first-mover advantage':
If other countries do not catch up, they may find that their companies are forced to adopt the digital currencies and policies of other countries as payment mediums.
Countries around the world have closely considered the implementation of CBDC and are actively moving forward. In our previous articles, we have reported on the Reserve Bank of Australia's proof-of-concept for the issuance of a tokenised form of CBDC that will be used by wholesale market participants for the funding, settlement and repayment of a tokenised syndicated loan on a n Ethereum-based DLT platform and other countries moving towards retail CBDC issuance.
Australia has longstanding colonial links and immigration from Europe, but will we welcome the same approach as the EU to the Aussie dollar? We hope so, but only time will tell.