Reading a Reserve Bank of Australia speech on "Financial Innovation and the Future of CBDC" released today.
If I am reading this correctly their biggest concern of issuing a retail CBDC is facilitating bank runs and that if each Australian household was to withdraw only $5,000AUD it would put banks dangerously close to minimum internal liquidity buffers.
That seems like a surprising small amount to cause such panic. Imagine if there was something that each household could convert $5,000 to... 🤔
The RBAs proposal to stop bank runs to a digital currency occurring is in times of crisis to limit holdings and apply negative interest rates to CBDC holdings. Imagine if this something else couldn't do that... 🤔
https://www.rba.gov.au/speeches/2024/sp-ag-2024-09-18.html
Pretty crazy.
From what I understand they legally don't have to hold anything in reserves. So 0% fractional reserves 🤣
The risk is in the legacy system.
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