Australia is the latest country to reject Libra, a proposed digital currency payment project from the international social media platform Facebook. The country’s central bank also says it does not need sovereign digital currencies because commercial banks already have working electronic payment solutions.
RBA high demand for Libra regulation
The Reserve Bank of Australia (RBA) has submitted a recommendation to Parliament stating Libra not to be allowed in the country without strong regulatory guidelines.
Australia’s central bank strongly stressed its anti-Libra stance declaring that the strict regulations of Libra would not be enough to justify the reason for the project.
A citation from its submission to the country’s Senate reads that the G7 warned that private sector global stablecoin initiatives should not be allowed to activate until all risks and regulatory requirements have been addressed. The RBA agrees with this opinion.
Not only Australia rejects Facebook’s Libra, since the release of its white paper, but nations like Germany, France, and China have also openly stated that they will block Facebook’s proposed digital currency solution.
Like other critics, the RBA says Libra can create serious risks to sovereign monetary policies and impact volatility in global exchange rates. To deal with visible threats of Libra, some countries are actively exploring their own state-issued digital currencies.
Australia does not need CBDC
Furthermore, the RBA claims that Australia does not need a central bank digital currency (CBDC) because Australians have already got low-cost and efficient real-time payment methods. And Australia is unclear if there will be a strong demand for global stablecoins even if they do meet all regulatory requirements, particularly for domestic payments.
According to Australia’s central bank, it did admit that citizens have not been well served in the cross-border payments arena. It said that while Australians might not have been well served by banks providing cross-border payment services in the past, massive new non-bank digital players have joined in the market in late years providing significantly cheaper and faster money transfer services.
In 2019, the country’s Department of Treasury released a draft proposal to limit cash payments to $10,000 but not mentioning cryptos.
While the RBA might be against CBDCs, the conversation around state-issued sovereign digital currencies is ongoing. According to our news, the International Monetary Fund (IMF) also stated their role in the CBDC topic.
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