Public Support for Retail Central Bank Digital Currency Lacking - Reserve Bank of Australia Study
Summary:
The Reserve Bank of Australia conducted a study to assess the public's perceived value of a central bank digital currency (CBDC), gauging potential privacy benefits and preparedness to pay for its use. The study also explored charges for privacy and safety options and the value of a CBDC being a credit risk-free alternative to bank deposits. The findings indicated a lack of public support for a retail CBDC, with the majority of people valuing privacy and preferring to share information with the Australian financial crime authority and commercial banks.
The Reserve Bank of Australia (RBA) recently looked into the public's potential value for a retail Central Bank Digital Currency (CBDC). They tried to gauge the readiness of people to pay for the use of such a digital asset in a digital wallet and what potential privacy benefits a CBDC might present. The idea of the CBDC, as highlighted by the RBA, would be a digital medium of exchange that's safer and potentially more secure than typical bank deposits. To achieve this comprehension, RBA carried out a targeted choice test to evaluate the public's value for items without markets.
The research also looked at charges for privacy and safety options of up to 5 Australian dollars (AUD), roughly equivalent to 3 USD. They found that if users paid 5 AUD per year, it would total about 100 million AUD in charges, a sum they deemed not substantial enough to override other pertinent factors in the decision to issue a CBDC.
One of the key values of a CBDC is the absence of credit risk, unlike bank deposits which are tied to the success of the bank. The data from 2022 used in the study showed that the public is not ready to hold an account with the RBA in place of a commercial bank - in fact, they would prefer to pay (less than an AUD a year) not to. This reaction aligns with the perception in Australia that bank deposits are already safe, and that the option of physical cash issued by the Reserve Bank of Australia remains readily available.
The RBA also noted public opposition as a possible factor affecting their results.The survey assumed a system with no intermediary, meaning that the RBA would directly open accounts for the public. However, most other CBDCs that are in active use or are being tested involve the services of a financial institution to serve the CBDC users. Therefore, the RBA acknowledged that an intermediated CBDC might have different privacy options.
The understanding of the value of privacy proved a bit more intricate. Prior research indicated that while people seem to prioritize privacy highly, they often don't utilize privacy measures in practice, making the value of privacy hard to quantify. The study results revealed a distinctive preference for sharing information with the Australian financial crime authority and commercial banks, a choice valued around 5 AUD more than sharing data with the RBA.
To summarize, the public support for a retail CBDC is limited. In previous research, the RBA found more positive sentiment towards a CBDC, but those studies mainly focussed on the use of a wholesale CBDC.
Published At
4/11/2024 11:34:31 PM
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