The Reserve Bank will pilot a form of digital money next year but remains unconvinced that Australia needs it.
"Our project team is in the process of selecting a number of proposed eAUD use cases to take forward into the pilot phase early next year," Assistant Governor Brad Jones told a digital finance conference.
As far as monetary economics goes, the introduction of a general purpose central bank digital currency would be revolutionary, he said on Thursday.
"A strong public interest case would first need to emerge. On balance, we have yet to see that case made in Australia," he said.
Dr Jones said the RBA was not alone, as no other advanced economy central bank has committed to issuing a general purpose CBDC.
"But with our eAUD pilot program in full swing, and changes in the digital economy and money and payments landscape occurring at a frenetic pace, the bank is keeping an open mind," he said.
Recent extreme weather events in Australia are a reminder that electronic and physical cash distribution networks can be severely disrupted, Dr Jones said.
And cyber disruptions represent a universal risk from which Australia is not immune, he told the Central Bank Conference on the Microstructure of Financial Markets in Sydney.
He said digital money could help when electronic communication and power networks are disrupted.
It could also reduce the cost of settling transactions across borders, and increase competition by including more non-banks in services.
But a wholesale digital coin used between banks would mean less change to the status quo.
"One distinct possibility is that the next few years prove to be more evolutionary than revolutionary," Dr Jones said.
Building on the role that exchange settlement balances already play in the Australian financial system, he said it seems a smaller leap to imagine that a wholesale CBDC would circulate ahead of a general purpose variety.
In some low-income countries where many households and small businesses are "unbanked" because there are no services available, a key motivation for issuing a CBDC has been to strengthen financial inclusion.
"But, in Australia, a very small proportion of households are without access to banking and payment services, and it is not obvious how a CBDC would bring them into the fold," he said.
Some countries argue a digital coin would help where banknotes are hard to access or sparingly used.
But physical cash in Australia is available and still appears valued by households as a useful backup for electronic payments and as a store of wealth, he said.
The central bank's project with the Digital Finance Cooperative Research Centre is exploring how digital money might be used, building on the RBA's earlier proof-of-concept work.
