RBA says digital currencies too small for it to regulate

Senior Reserve Bank officials have told a Senate inquiry that the "very limited" use and acceptance of digital currencies in Australia meant these alternative forms of payments did not pose any financial stability risks.

The RBA's head of payments, Tony Richards, and the senior manager of its payments policy department, David Emery, yesterday attended a hearing of the Senate Economics References Committee, which is inquiring into digital currency.

Richards said the RBA was keeping an eye on the development of digital currencies, which it believes could eventually have broad applications.

He said one case where digital currencies might gain traction was in the area of international remittances, which can be expensive and subject to delays.

"More broadly, many payment attributes of digital currencies are already available in the traditional payments system, or will be available in the case of new services that may be facilitated by the New Payments Platform project," Richards said.

He said one factor working against more widespread use of digital currencies was their price volatility.

Digital currencies are not currently regulated by the RBA. "It is currently unlikely that any benefits of regulation would outweigh the potential costs," Richards said.

He said digital currencies were more likely to raise concerns over issues of taxation, money laundering and consumer protection than financial stability.