Lowe flags chance of official e-dollar

RESERVE Bank governor Philip Lowe says “speculative mania” appears to be engulfing markets for cryptocurrencies such as bitcoin, and such currencies are mostly attractive to criminals and speculators.

But blockchain, the technology underpinning bitcoin, could one day support a digital Aussie dollar, Dr Lowe says.

Speaking at a payment industry conference yesterday, he said unregulated cryptocurrencies were attractive to black market operators.

The central bank was not convinced the time was right to issue an electronic dollar to operate in tandem with physical banknotes, he said.

But a blockchain-based socalled eAUD could eventually lead to more efficient, lowercost business processes and payments, Dr Lowe said.

“It is possible that the RBA might, in time, issue a new form of digital money — a variation on exchange settlement accounts — perhaps using distributed ledger technology,” he told the Australian Payment Summit in Sydney.

“The case for doing this has not yet been established but we are open to the idea.”

The eAUD would be used in specific settlement systems but, while bitcoin and many other cryptocurrencies and tokens on a public ledger were mined using computer processing power, the Aussie would still be backed by the central bank, he said.

Dr Lowe added his voice to comments made by many financial institutions that bitcoin — which has increased in price from about $US800 ($1060) at the start of the year to more than $US17,000 — was mostly attractive to criminals and speculators.

“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,” he said.

The US Securities and Exchange Commission yesterday warned it would take action against firms that raised money through the online currency if they broke its rules.