Australia’s CBDC Pilot: A Step Towards Surveillance and Control?
The Reserve Bank of Australia (RBA) has launched a pilot program for a Central Bank Digital Currency (CBDC), dubbed Project Acacia, despite its own report in 2024 finding no clear case for public interest. This move has raised eyebrows, with critics warning of potential risks to privacy and surveillance. The pilot, which began earlier this year, aims to test the feasibility of a digital currency in the Australian wholesale market, with 24 application cases, including 19 real-money transactions and 5 simulated ones.
Questions of Intent
The RBA’s decision to proceed with the pilot, despite its own findings, has sparked concerns about the true intentions behind the project. With the current retail payment system in Australia already deemed efficient, innovative, and safe by global standards, the need for a CBDC is unclear. This has led some to speculate that the real motivation behind the project may be to exert greater control over citizens’ financial transactions. The fact that participants in the pilot will be granted regulatory relief, which may not be available to the general public, further fuels these concerns.
Programmable Money, Programmable Control
One of the most significant concerns surrounding CBDCs is their potential to enable governments to monitor and restrict citizens’ financial transactions. With programmable money, authorities could potentially freeze or block certain types of expenses, raising serious questions about privacy and surveillance. While the RBA has acknowledged the possibility of offering complete anonymity for certain transactions, it is unlikely that a CBDC would provide the same level of anonymity as cash or cryptocurrencies. The Bank of England’s claims that its digital pound would not be programmable or limited, while reassuring, are not entirely convincing, given the historical influence of third-party interests on traditional banking infrastructure.
Rollouts and Roadblocks
The Australian Securities and Investments Commission has provided regulatory relief to support the pilot, which will test tokenized asset transactions using CBDCs between participants and a limited number of financial institutions. However, any mistakes or issues during the rollout, such as downtimes or interoperability problems, could erode confidence in the technology and institutions involved. This, in turn, could exacerbate the gap between digital-first and cash-centric populations. While more precise monitoring and regulation of CBDCs may help mitigate these risks, they also increase the potential for abuse.
Last Thoughts
The RBA has recognized that the potential advantages of a wholesale CBDC, used exclusively by central banks and commercial banks, are more tangible. So, why the push for a retail CBDC? Some argue that it would be a significant achievement for Australia to become one of the first countries to implement a full CBDC in retail. However, with only three countries – Jamaica, Nigeria, and the Bahamas – having successfully launched CBDCs, the outcome is far from certain. As the pilot program progresses, it remains to be seen whether decision-makers will find sufficient reasons to justify a broader introduction of CBDCs in Australia.
About the author: Maksym Sakharov is the CEO, co-founder, and board member of WEFI, a non-customer-specific Neobank. With over eight years of management experience in the IT industry, Maksym offers a diverse skill set, including strong leadership, operational excellence, and service provision. His strategic approach to management focuses on optimizing processes and increasing team performance, enabling companies to thrive in competitive markets.
