One of the Reserve Bank of Australia’s most senior staff says how a central bank-backed digital currency could help to further develop biodiversity and carbon credit markets “warrants very close investigation”.
Financial system assistant governor Brad Jones on Monday told a Tokyo conference that though the RBA was keeping an open mind on a central bank-backed digital currency for Australia, the most compelling use was for wholesale purposes — or between banks and others in the financial system, rather than for consumers.
If used as such, this would likely mean settlement speeds were increased and could help lower costs of capital and transactions, as well as in “completely new markets”, Dr Jones said.
“Where underlying assets are nature-based assets like biodiversity or carbon credits, that’s an area that warrants very close investigation,” he said.
The RBA has intensified its focus on the impacts of climate change on the economy, and the transition to a low-emissions environment.
Dr Jones said this was particularly occurring through greater resources to study the impacts of structural changes and potentially frequent supply shocks, as well as risks to financial stability, monitoring climate-related trends in financial markets and supporting the Federal Government’s measures to prevent corporate greenwashing.
He added while the operational independence of central banks did not provide “unfettered ability” to pursue its own interests, they would be “abrogating their responsibility” if they failed to dedicate resources to understanding how climate change would affect the economy.