In an interview with Cointelegraph, Dilip Rao, the former Ripple executive leading Australia’s CBDC pilot, discusses how central bank digital currencies (CBDCs) may not address current challenges but could prove valuable in solving unforeseen future problems. As the research program director at the Digital Finance Cooperative Research Centre (DFCRC), collaborating with the Reserve Bank of Australia on CBDC exploration, Rao believes that a CBDC could be designed for use cases that are currently unexplored.
Rao emphasizes that the purpose of CBDCs is not limited to immediate problem-solving but rather anticipates potential challenges that may arise in the future. While specific use cases are still being analyzed, the forthcoming report from Australia’s CBDC pilot will identify which scenarios warrant further investigation. Rao highlights that a CBDC might find utility in facilitating large institutions trading tokenized assets on marketplaces, offering enhanced risk mitigation measures.
However, Rao acknowledges the importance of addressing the question of why individuals would choose to use a CBDC. He suggests that public consultation and garnering support from politicians are crucial steps in achieving widespread adoption. For legislative changes to occur, Rao explains that politicians must understand the value proposition of CBDCs and recognize the problems they can solve for the general population. Public engagement and consultation would be instrumental in gaining the necessary backing for legislative modifications.
As CBDCs present both technological and legislative challenges, Rao underscores the need to navigate these hurdles and ensure that people feel comfortable with their implementation. Political considerations and voter sentiment play a significant role in shaping the trajectory of CBDC adoption. To build public trust, it is essential to address real-world problems effectively by employing suitable technology and implementing legislation that aligns with public expectations.
Australia’s CBDC pilot is actively exploring 14 potential use cases for a CBDC. The forthcoming report will prioritize the most promising scenarios that merit further investigation and development. While the introduction of a CBDC may not immediately address current challenges, its potential lies in proactively preparing for unforeseen issues that could arise in the future.