A recent study by the Reserve Bank of Australia (RBA) has revealed a lukewarm public response to the concept of a retail central bank digital currency (CBDC) in Australia. The research aimed to assess the public’s valuation of the potential benefits of using a CBDC, focusing on privacy and safety compared to conventional banking options.
CBDC’s Perceived Value in Privacy and Safety
The RBA’s hypothetical CBDC was presented as a digital currency that could potentially offer greater safety and privacy than commercial bank deposits. However, the discrete choice experiment conducted by the RBA to gauge public interest showed that Australians would not be inclined to pay significant fees for these advantages. Even a modest annual fee of 5 Australian dollars (around 3 U.S. dollars) for enhanced privacy and safety through a CBDC digital wallet did not garner substantial interest, indicating that such fees would not generate enough revenue to significantly influence the decision to issue a CBDC.
Public Preference for Commercial Banks
The study’s findings underscore a preference among Australians for maintaining accounts with commercial banks rather than a central bank account that offers a CBDC. This preference aligns with the perceived safety of bank deposits in Australia and the availability of physical cash as an alternative. The data revealed a general unwillingness to switch from commercial banks to an RBA account, with respondents indicating they would rather pay to avoid such a transition.
Privacy Concerns and Data Sharing
Privacy considerations played a complex role in the study, reflecting the often contradictory attitudes towards privacy in practice versus principle. While previous research suggested that privacy is highly valued, the RBA’s findings indicated a preference for sharing personal financial data with commercial banks and the Australian Transaction Reports and Analysis Centre (AUSTRAC) over the RBA itself. This suggests that Australians trust their existing banking institutions and regulatory bodies more than the central bank when it comes to handling their financial data.
Implications for CBDC Development
The RBA’s study highlights significant challenges in garnering public support for a retail CBDC in Australia. The findings suggest that the perceived benefits of a CBDC in terms of privacy and safety may not be compelling enough to shift Australians away from their current banking preferences. Moreover, the research indicates that any future CBDC design would likely need to incorporate intermediation by financial institutions to align with public expectations for privacy and service delivery.
As the RBA continues to explore the potential of CBDCs, both for retail and wholesale applications, these insights into public sentiment will be crucial in shaping the development and implementation strategies for digital currencies in Australia.
