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Australia Could Be Getting A New Currency In The Form Of Cryptocurrency

Australia will eventually have a second currency, in the form of cryptocurrency, according the Reserve Bank of Australia.

"Enough countries will go down that route and we'll end up there," Reserve Bank of Australia assistant governor of financial systems Michele Bullock said on Wednesday. Momentum on central bank digital currencies (CBDCs) is building but everyday Australians are unlikely to see a "kanga coin" just yet.

But there would need to be rules around privacy and a capacity to track where people are sending their money.

While cash affords anonymity, and no one needs to know what is being transacted with bank notes, Ms Bullock said this was "extremely unlikely" to be the case for CBDCs.

Despite the rise in popularity of cryptocurrencies, if CBDCs became widespread then unregulated cryptocurrencies were likely to remain "niche" and not become a replacement for cash, Ms Bullock said.

In other parts of the world where many people don't have bank accounts, CBDCs are already being used to further financial equality and better track money laundering and cyber criminals.

Unlike anonymous cryptocurrencies, CBDCs are official, such as the Sand Dollar issued by the Central Bank of The Bahamas in October 2020.

In Australia, an official digital currency or token would be "of most importance in the wholesale space", for settlement of large amounts between banks and central banks, Ms Bullock said.

The RBA has been looking at settlement of big amounts of money changing hands between financial institutions, and experimenting with a "token", most recently with Commonwealth Bank and NAB.

AAP with The Project