Australian Central Bank - Bitcoin Is Bad But You'd Love A Digital "e-AUD"

Sweden’s Riksbank, the world’s oldest central bank, is exploring the possibility of a digital register-based e-krona; the Reserve Bank of New Zealand is researching whether its physical currency could be replaced by a digital alternative; the Bank of England is trialling blockchain-like systems; the Monetary Authority of Singapore is examining the use of distributed ledger technology for clearing and settlement of payments; and the PBoC said in October that it had completed tests on algorithms for a prototype of its own digital currency.

Now the Reserve Bank of Australia (RBA) has entered the fray with an all too familiar refrain.

We’re paraphrasing…Bitcoin is bad, the realm of criminals and little more than a speculative mania, but the technology underlying Bitcoin has great potential, which we can exploit in time with our own “superior” digital currency.

This is what Philip Lowe, the RBA’s Governor, actually said about Bitcoin at the Australian Payment Summit, which took place today at the Hyatt Sydney Regency in Sydney Harbour.

When thought of purely as a payment instrument, (Bitcoin) seems more likely to be attractive to those who want to make transactions in the black or illegal economy, rather than everyday transactions. 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.

No surprise there, just more of the same from banking Mafiosi like Lowe, the ECB’s Constancio (“tulip”) and most notably, JPM’s Dimon. The Financial Times article outlining the RBA’s thinking sets out the case for blockchain/distributed ledger technology.

Central banks, commercial banks and other financial institutions are exploring how to use private distributed ledgers to make financial transactions cheaper, more transparent, and less vulnerable to fraud. Banks and settlement systems currently use central electronic ledgers to track money transfers. But these systems can be slow, often rely on manual input and are open to hacking. Distributed ledger records transactions through a network of computers rather than a single central party…The attractions of the technology include the ability to make fast digital money transfers that do not carry the cost of handling cash, tracked securely by the network.

But…there’s just one thing missing, which is where we “need” our central banking friends.

However, a potential drawback of bitcoin-style systems is the lack of a central entity standing behind the liability, Mr Lowe said.

Philip Lowe’s and his RBA colleagues are examining the potential for an eAUD, which would be issued alongside physical banknotes - although the FT article neglects to add the word “initially” (if you’ll excuse our cynicism).

Australia’s central bank is exploring creating electronic banknotes using the technology underpinning bitcoin, as major central banks around the world race to bring cash into the digital age. Philip Lowe, governor of the Reserve Bank of Australia, said in a speech on Wednesday that the bank was analysing the benefits and drawbacks of issuing an electronic form of the Australian dollar — the “eAUD” — alongside traditional banknotes.

Speaking at the Australian Payment Summit, Mr Lowe said: “It is possible that the RBA might, in time, issue a new form of digital money…perhaps using distributed ledger technology.” He added that although the RBA has “no immediate plans” to issue digital dollars, the central bank is “continuing to look at the pros and cons”. The central bank also is exploring a new digital dollar settlement system based on the use of distributed ledger technology, or blockchain, the technology behind bitcoin. Digital dollars could take the form of a “token” that is issued and stored in consumers’ digital wallets, which can then be used for payments in a similar way to physical bank notes.

Perhaps in a classic case of “problem, reaction, solution”, we’re speculating of course, the RBA will introduce an eAUD and phase out physical currency during the next financial crisis. In the case of Australia we may not have too long to wait as we discussed last month in “The Party’s Over For Australia’s $5.6 Trillion Housing Frenzy”. However, we noted the best analogy for the “Down Under” economy in “Why Australia’s Economy Is A House Of Cards” in which Matt Barrie and Craig Tindale argued that the three decades long expansion was mostly the result of “dumb-luck”.

As a whole, the Australian economy has grown through a property bubble inflating on top of a mining bubble, built on top of a commodities bubble, driven by a China bubble.

Browsing through the speaker biographies at the Australian Payment Summit, besides being RBA Governor, Philip Lowe is also (we can’t help but smile) a member of Australia’s Financial Stability Board and “spent two years at the Bank for International Settlements working on financial stability issues”. On a serious note, we know the direction which central banks want to lead us, as we argued a week ago with regard to the nomination of Marvin Goodfriend as Fed governor.

It’s clear from reading between the lines that although central bankers are not engaging in a public discussion, the architects of the boom-bust cycles are considering their policy options for the next crisis…the one where their latest credit/asset bubble bursts in horrendous fashion. It’s also clear that the preferred solution is negative interest rates and either abolishing paper currency or taxing it in line with a depreciating digital currency standard.

The RBA’s Philip Lowe is another minion seeking to control the narrative for the banking Mafiosi.


LetThemEatRand Thu, 12/14/2017 - 23:48 Permalink

Catherine Austin Fitts has been going around the alternative news circuit making a very interesting argument, that the central bankers are letting all of the brainiacs in the crypto-sphere do their work for the CB's (developing a working one world currency), so they can usurp it when the time comes.

Radioactive Ideas LostandFound Fri, 12/15/2017 - 08:27 Permalink

I suspect that the involvement of the the V-Squid and JPM in BTC will result in 2 important outcomes. Well, important to the CBs. 1. Everyone will get hosed. Ok, not everyone, but everyone that is not Goldman and JPM. 2. THEN the pleebs will scream, foam at the mouth and cry for their "protectors" in Congresss to establish some regulations and oversight. I have made the case for a while that the allowed existence of cryptos is purely a function of moving us much closer to a cashless, rfid-chipped life. Soon you wont need to bother with all that feces and glitter covered money, just a small chip in your wrist...

In reply to by LostandFound

HRClinton LetThemEatRand Fri, 12/15/2017 - 00:02 Permalink

The Banksters are freaking out, because their Plantation model is threatened.BTC = Flight of Fiat FRB Capital        = Money of the Parallel Economy         = Money free of the Debt Plantation Pure CCs + PM + Fuel-backed CCs = Fiat killersThe banksters know this, even if some ZH oldbugs still don't. Parallel Economy Currency = AU + Barter + Crypto  = Outflow of FRB fiat into decentralized, untracked assetsGoing Galt = joining the Parallel Economy       = Freeing yourself from the CB Plantation.

In reply to by LetThemEatRand

LetThemEatRand shitshitshit Fri, 12/15/2017 - 00:42 Permalink

I think you somewhat hit a nail on the head in terms of why I'm against this philosophy.  Alan went Galt after he cashed in on everything he and Ayn Rand said was wrong about society.  So it's just a justification for personal wealth at the expense of others, based on fraud and theft.  Neither Alan nor Ayn built a better railroad.  They made money talking about money.

In reply to by shitshitshit

zorba THE GREEK LetThemEatRand Fri, 12/15/2017 - 00:11 Permalink

This digital coin shit has gone crazy. Just for a goof I told ,my friend last week to buy Ripple. It  was .23+ now it is .75, more than 3 times. earlier today it hit .85. I hope he doesn't listen to me, I only told him it was a good buy because it was so cheap that some crooked group would drive it much higher to make a profit. Watch the crypto coin called Ripple, it has been around for a while and is used a lot overseas. If it pulls back some more, I think I am going to step in. Ripple is the new Bitcoin. Remember, it is not about the price, but the percentage it goes up. 

In reply to by LetThemEatRand

Mcguyver LetThemEatRand Fri, 12/15/2017 - 00:17 Permalink

They can use fiat to buy rnough volume in any crypto that alloes them to destroy it as a medium of exchange for common use. However they do not realize the unintended consequence will be creating a bunch of millionaires in the process... All the hodlers.... But that will not be a detail theyll have overlooked. They will follow up that shenanigan with making their previous fiat irrelevent and replacing it with their new fiat

In reply to by LetThemEatRand

holdbuysell Fri, 12/15/2017 - 00:29 Permalink

The banksters are setting up a redux of the crisis in decentralized paper currencies of two centuries ago, selling to the myth that the centralized ones are so much better. They will create a crypto crisis, the sheeple will shriek and demand saving, and 1913 will be ushered in again in 2033. ** Date provided is only for example as past performance is not an indication of future results. Your mileage will vary.

gunzeon Fri, 12/15/2017 - 00:20 Permalink

The crypto craze would have less appeal if banks had not been so greedy and governments had not been so stupidly wasteful.For example, waiting 3 working says for a bank to bank transfer ? this could have been done within seconds twenty years ago but no, they wanted a balance to put on the money market, and we, back then, had no alternative.Now the clever fuckers are seeing the light, but too little too late in typical government/establishment fashion, but the boots on other foot now, let's hope they get their balls kicked till their nose bleeds ...There's the quick and the dead.

silverer Fri, 12/15/2017 - 00:31 Permalink

Well, now I'm convinced that Bitcoin, despite it's inherent flaws, will never go away. It's the original "uncorrupted" digital currency.

gunzeon AUD Fri, 12/15/2017 - 01:23 Permalink

exactly ! He's spouting dogma he does not understand just so he can sound "up with it" to the ignorant politicians and journalists he needs to impress. He deos not even wonder how we have lived without it for so long. Answer: why have a blockchain that only you control ? Ergo, you use what is called a database !blockchains are nothing new ... and afaik blockchains had no use until decentralised digital money ( bitcoin ) was thought of. 

In reply to by AUD

Jack Oliver Fri, 12/15/2017 - 01:32 Permalink

Australia’s ‘Reserve Bank’ is a Rothschild Bank !!

If they are promoting ANYTHING - I would be sceptical !

‘Crypto’ - is a ‘backdoor’ to the Rothschild ‘one world currency’ dream !

See if China and Russia ‘embrace’ it - I doubt they will !!

luckylongshot Fri, 12/15/2017 - 02:16 Permalink

While the battle against decentralised money is causing some major stress to the Rothschild Central Bankers, the real kill shot -Public Banking- is still to come. The fireworks are just beginning. 

Yellow_Snow Fri, 12/15/2017 - 04:13 Permalink

Now what would a Central Bank do with a noncorruptable, decentralized, non-inflating e-currency ???Yeah... and I'm gonna turn water into ice cubes using a blow-torch...

peterk Fri, 12/15/2017 - 04:47 Permalink

E-AUD or not....Long MAY WE SAY  GOD SAVE THE QUEENBECAUSE" NOTHING WILL SAVE  THE GOVERNOR (GENERAL) " OF THE RBA.. to paraprhse the great Australian PM Gough Whitlam. The RBA  is  sweating  BRICKS of DEBT ... as interest rates are going up EVERYWHERE, even in the USA,, slowly but assuredly... ECB BOJ etc etc etc... but  the RBA, in its  omnipotent wisdom, see's no need  to raise rates... BECAUSE THEY CANT.FORGET CANADA . SWEEDEN... ... AUSTRALIA   is DEBT CENTRAL. TODAY  i went shipping,  and  i will tell you  that property proces are putting BUSINESSES  OUT OF BUSINESS...  2  Shops who obviously  CANNOT afford the RENT,  stated in the same premises but with  HALF of the  premises as it has been subdivided.  Their businesses are now  half the size  of a few months ago. This is  ONE small example of  how  the sacred property bubble is  killing the economy.   Anothe rplace, local  golf course... gone.. to prooperty developeent... Another  mining site making bricks and  paving  suplies, basically a large mining site, all gone  put out of business for  developemet/apartments.Another one locally to me , a  flowerpower nursery for plants... again  shutting down relocating  and sold for  aprtments.All this stuff within 10 minutes drive to me.The property/debt bubble   has gone SUPERNOVA... it is comsuming  everything imoAND NOW  its time for  RATES to rise as everywhere else.... snad the RBA  talks of a E-AUD.....  that wont help  ONE IOTA...  it will only make it easier to for the government to steal and track your wealth / transactions and  tax it.ORWELLIAN AUSTRLIA IS COMING

JailBanksters Fri, 12/15/2017 - 05:05 Permalink

Australia has had eAUD for donkeys years, it's called an ATM cardI'm NOT going to love it, because the CB is going to own it and control it.And that means Traceability and Fees.One of the things I really like is it's real plastic money, it's totally anonymous, it could be traceable but that would be really hard to do.So why would anyone choose a CB controlled Crypto as opposed to a generic Crypto not aligned to any bank and free of Bank Fees.

olibur Fri, 12/15/2017 - 07:30 Permalink

"...The RBA’s Philip Lowe is another minion seeking to control the narrative for the banking Mafiosi..."Then, there are some people, they’re not stupid. They’re full of shit.... You’ll be listening to some guy, saying, well, he’s fairly intelligent. Ah, he’s full of shit!G. Carlin.