Australia’s central bank governor has said that the current fascination with digital currencies like bitcoin ‘feels more like a speculative mania.’
At a time when the digital currency is recording record highs, the head of the Reserve Bank of Australia (RBA), raised concerns about the use of the currency as a payment choice. In a speech today called An eAUD? at this year’s Australian Payment Summit, Philip Lowe said:
In reality these currencies are not being commonly used for everyday payments and, as things currently stand, it is hard to see that changing.
He went on to add that the value of the digital currency is incredibly volatile, while the number of payments that are currently handled is very low. Furthermore, Lowe argues that the transaction cost involved when making a bitcoin payment is high, adding that the use of electricity during the mining process is staggering.
So the current fascination with these currencies feels more like a speculative mania than it has to do with their use as an efficient and convenient form of electronic payment.
In principle, Lowe says, a new form of electronic payment method that could be introduced may be a form of electronic banknotes or even an electronic cash. He adds that a form of electronic Australian dollar banknote is one case to think about, adding:
Such banknotes could coexist with the electronic account-to-account-based payments system operated by the banks, just as polymer banknotes coexist with the electronic systems today.
However, while he says that the technologies are still developing for these tokens, he questions who would issue them? Would that be down to the RBA or somebody else?
In principle, there is nothing preventing tokenised eAUDs being issued by the private sector. It is conceivable, for example, that eAUD tokens could be issued by banks or even by large non-banks, although it is hard to see them being issued as cryptocurrency tokens under a bitcoin-style protocol, with no central entity standing behind the liability.
While a tokenised eAUD is conceivable, Lowe believes that ‘experience cautions that there are significant difficulties and dangers associated with privately issued fiat money.’
As a result, Lowe doesn’t think that there is ‘a convincing case for issuing Australian dollars on the blockchain for use with limited private systems has not yet been made.’