Central Bank Digital Currencies (CBDCs) may not solve any problems faced today, but could be the answer to ones not even fathomed yet, says the executive spearheading Australia’s CBDC pilot.
Speaking to Cointelegraph, Dilip Rao, a former Ripple executive who’s now spearheading Australia’s in-pilot CBDC research project, believes a central bank-issued currency could be built for use cases not yet considered:
“It may not solve a problem today, but maybe it solves a problem the day after tomorrow.”
Rao serves as the research program director at the Digital Finance Cooperative Research Centre (DFCRC) which is collaborating with the Reserve Bank to explore use cases of a potential CBDC.
Rao, however, said the question is yet to be answered why individuals would want or need to use one.
One possible future use, Rao explained, could be large institutions trading tokenized assets on marketplaces that may prefer using a CBDC to mitigate risks.
Big shout out to attendees at the #AustralianCBDCPilot Conference last Friday – 100 in person and over 150 online!
15 use cases demonstrated, three panels offered deeper insights into the #futureofmoney!
— diliprao (@diliprao) May 29, 2023
Australia’s CBDC pilot is examining 14 possible use cases. Rao said the report on those tests — yet to be released — will narrow down which would deserve further exploration.
“You don’t necessarily need a CBDC in every use case,” he said. He added “people have to see value” in a CBDC if it’s to be widely adopted.
Another hurdle for a CBDC, at least in Australia, would be the required legislative changes that need public backing.
For such changes to make it through parliament “politicians have to come on board,” said Rao, which would require a wide amount of public consultation.
Such consultation would focus on solving the “problems that people want solved,” according to Rao. “No politician is gonna do something that will lose votes,” he added.
“You have to go through […] Solving those problems, whether with technology or with legislation to make sure that people were comfortable with what you were doing.”