2/24/2016, 6:55 PM (Source: TeleTrader)
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Australian dollar has a digital in future - RBA

Just days after Reserve Bank of Australia (RBA) celebrated the 50th anniversary of decimal currency and announced that a new 5-dollar bill would be issued on September 1, one of RBA's leading figures discussed the future of payments.

Talking about innovation in payments, Tony Richards, head of Payment Policy Department at the RBA described a future of paying instruments becoming completely digital.

Indicating the visible change in the way people and companies pay for goods and services was the cheque, once a leading non-cash paying instrument. Bank cheques, personal cheques, and commercial cheques - all but vanished. The trend is present around the world, according to data from various central banks.

The old style signed paper of value was widely replaced by debit and credit cards, except in some cases, such as property transactions. The cheques will be phased out, "but only when it is clear that the needs of current cheque users can be met by other payment methods".

When it comes to cash, the RBA is missing full data, but banks report that small cash kept its place in everyday low-value transactions - some 47% for values under AU$20 back in 2015, down from 70% in 2007.

The New Payments Platform (NPP), which is scheduled to begin in late 2017, opens the way for digital currencies. While the RBA doesn't consider the privately-established virtual currencies like Bitcoin to be acceptable right now, Tony Richards recognised the possibilities of the technology and approach behind the digital currency.

"Bitcoin has, however, served to stimulate interest in the potential offered by distributed ledgers, extending to the possibility of central-bank-issued digital currencies. (…) The digital currency would presumably circulate in parallel (and at par) with banknotes and other existing forms of the national currency," said Richards in his speech on the subject.

"Both the Bank of England and Bank of Canada have indicated that they are undertaking research in this area. And a recent announcement from the People's Bank of China indicated that it has plans for digital currency issuance, though few specifics were provided," said Richards.

There is also an important obligation for the RBA to oversee the plans of the ASX Group, known as the host of the Australian Stock Exchange, to explore the use of distributed ledgers.

According to RBA The technology of distributing the information about transactions has proved to be very important for various forms of payments, including the market trade, not only for everyday petty cash purchase.

Image: Reserve Bank of Australia

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