T Skevington and M Bacina
Australian Payments Network Summit hosts Libra debate
The Australian Payments Network recently hosted its annual Summit in Sydney on 10 December 2019. The Summit featured a debate moderated by prominent economist Warren Hogan between Assistant Governor of the Reserve Bank of Australia, Michelle Bullock, Piper Alderman’s Michael Bacina, Holon Global Investments' Heath Behncke and USYD researcher Luke Deer. The debate considered whether Australia is ready for a digital currency like Facebook’s Libra.
As with any comments from a central banker on Libra, Michelle Bullocks' comments at the Summit have since been picked up by both the Australian, and the Australian Financial Review. Ms Bullock's comments broadly echoed the comments already made by various other RBA representatives, namely:
Regulators globally remain unprepared for globally relevant stablecoins, but are aiming to avoid an unlevel playing field leading to regulatory arbitrage;
Libra will not be able to operate until regulators are satisfied that Libra can operate with sufficient regulatory oversight; and
The RBA is conscious of the reality that "even if Libra doesn't succeed, something else will come along".
In addition to the above, Ms Bullock commented that her personal view was that there is unlikely to be significant consumer demand for Libra in Australia, on the basis that:
There just doesn't seem to me to be a case to be replacing an Australian dollar payment system for more than 90 per cent of payments, with this esoteric international thing ... throwing out the financial system because we have a shiny new play thing, I don't think is the way to go.
Ms Bullock's comments regarding international regulatory consistency's come after the CEO of Hong Kong’s Securities and Futures Commission Ashley Alder said world regulators need a united a response to Facebook’s Libra. She reiterated comments made by other regulators and central banks that Libra, or theoretically any other large, private, stablecoin project could pose a threat to fragmented financial regulators around the world. Adler argued that if a retail stablecoin is approved in one jurisdiction, it has the potential to scale incredibly rapidly if it has the support of a big technology company’s platform and user base.
Speaking more generally on the merits or otherwise of the Libra Project, Michael Bacina commented that the Libra Association's promises to comply with all necessary regulations before it proceeds should be taken in good faith, and that the Libra Association should be given time to address the issues raised with it.