The Reserve Bank of Australia (RBA) has examined the value the public would place on a retail central bank digital currency (CBDC). It looked at willingness to pay for the use of CBDC in a digital wallet and the privacy benefits that CBDC might offer.

The RBA described its hypothetical CBDC as “a digital currency that is even safer and potentially more private than commercial bank deposits” and used a discrete choice experiment to assess public valuations of goods without markets.

The research considered fees for privacy and safety options of up to 5 Australian dollars (AUD), which is equivalent to about $3 U.S. dollars. It added that that users paying 5 AUD per year would generate about 100 million AUD in fees — not a significant enough amount to “overwhelm the range of other considerations relevant to the CBDC issuance decision.”

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The safety value of a CBDC lies in its lack of credit risk, which is inherent in bank deposits, as banks can fail. Using data from 2022, the RBA was able to demonstrate that willingness to hold an account with the RBA instead of a commercial bank is in the negative — people would be willing to pay (less than an Australian dollar per year) not to do it. According to the RBA:

“This is consistent with bank deposits in Australia already being perceived as a safe form of money, and physical cash issued by the Reserve Bank of Australia continuing to be available as an alternative option.”

Public resistance to CBDC could also color those findings, the RBA said. The survey assumed the use of a disintermediated system in which the RBA would open accounts for members of the public. Most live and trial CBDCs are intermediated and make us of the services of a financial institution to provide services for CBDC users. The report noted that some policymakers expect to design an intermediated CBDC, which would have different privacy options.

Privacy data were much more complex. Previous research has suggested that people highly value privacy, but frequently forgo privacy measures in practice, making its value hard to assess. The results obtained showed a strong preference for sharing information with the financial crime authority Australian Transaction Reports and Analysis Centre and a commercial bank, which was worth about 5 AUD more than allowing data sharing with the RBA.

In short, the study finds little public support for a retail CBDC. The RBA has made numerous previous studies of CBDC, most of which reached positive conclusions. Those studies mainly looked at wholesale CBDC use cases.

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