Lisa Wade, the National Australia Bank’s head of digital innovation and sustainability, urged the government and Reserve Bank to create a digital Australian dollar.
NAB executive comes out in favor of CBDC
Central bank digital currencies (CBDCs) are crypto purists’ worst nightmares, as they stand for everything that crypto heads despise: centralisation, government interference, and potential control. Yet, Lisa Wade, a senior NAB executive, called for an Australian CBDC to ensure cryptocurrencies don’t destabilise the financial system. She suggested that such a digital Australian dollar would reduce the risk of over leveraged and under collateralised markets that could prompt the next major financial crisis. According to Wade, a solid CBDC and global financial infrastructure are crucial for realising large transactions and making full use of the functionality and programmability of digital money. Her statement follows the Commonwealth Bank’s announcement to add cryptocurrencies to its app, despite the fact that its CEO Matt Comyn called on regulators to step in and do their job in the wake of increasingly rapid innovation in the crypto space. For now, Australia is not as far as Nigeria, which has already launched a Nigerian CBDC, although the Reserve Bank has been preparing a report on a proof of concept for a CBDC.
Bankers note that crypto is changing the way banking works
Several senior figures in the financial space have commented on the challenges that banks are facing as a result of the surge of cryptocurrencies.
ANZ Bank’s banking services portfolio lead Nigel Dobson noted that banks have to face the challenges posed by blockchain technologies, which empower internet communities to compete with banks. He stated that the system would become more decentralised either way since the arrival of decentralised finance presents a paradigm shift for financial institutions. Dobson compared the arrival of DeFi to that of the internet 25 years ago, both started transforming businesses.
Macquarie Bank executive director Andrew Gee explained that Macquarie had been exploring opportunities in the space for 18 months. He noted that while the bank was approaching cryptocurrencies cautiously, it looked into lending collateralised by cryptocurrencies and other things it saw as opportunities.
Hayley Hopwood, Stripe’s head of growth in Australia and New Zealand, admitted the company was building out its crypto team as a result of the “switch” it has seen in the market. Stripe follows several fintech companies like Revolut that have already started offering crypto exposure to their customers.
Are CBDCs on the way?
With everyone agreeing that the emergence of cryptocurrencies is a game-changer for the financial system, the question remains: how are regulators going to react?
If you ask Ms Wade, no final decision has been made. She acknowledged the complexity of crypto but also called on bankers to help regulators develop a risk management framework. “CBA has been leading the way, and did so again this week,” Wade said while voicing her expectation for more cooperation in the future. Reconciling all interests will be a massive and thankless task for the Reserve Bank and government officials, but one they need to tackle urgently.