Australia's central bank has issued caution over heavy investments in cryptocurrency, flagging its long-term use as highly sceptical.
In a speech on Thursday, Reserve Bank Governor Philip Lowe further outlined the bank's ambitions to create a central bank digital currency which would underpin a financial payments system moving away from cash.
Dr Lowe said the rise of private cryptocurrencies would not be the main source of payments within the financial ecosystem, flagging a more stable form of digital currency would be needed to ensure robustness of the system.
"I remain sceptical that we will head in this direction for general purpose payments," he said.
"It is likely that the asset used for the settlement of most transactions in the economy will remain some form of secure fiat currency with a stable value, rather than cryptocurrency with a volatile price."
Dr Lowe also pointed to the high energy intensive process used in mining blockchains for cryptocurrencies.
"Anyone purchasing these assets should take care," he said.
"There is still a lot of uncertainty about the long-term usefulness of these assets - not to mention the significant energy consumption that is required to make a transaction using some of these crypto-assets."
The central bank warned consumers to consider the security of the funds invested, price volatility and the stability of online exchange platforms.
Dr Lowe also explained the current debit payment system has served the economy well, but a more modern system is needed to cope with emerging technologies such as digital wallets.
The governor's comments come a day after Treasurer Josh Frydenberg outlined the federal government would look to overhaul Australia's payments regulation, which would bring tighter controls on emerging payment technologies such cryptocurrency and "buy now, pay later" services.
In principle, the reforms have been welcomed by both the Australian Banking Association and the Australian Finance Industry Association.
The RBA also backed the move but claimed open banking laws, which give consumers the right to share their personal data, would be crucial in a fully digital payments system.
"The government's support for developing a strategic plan for the payments ecosystem is a positive step," Dr Lowe said.
"Because payments systems are networks there is a need for coordination, which can be challenging amongst competitors."
Labor treasury spokesman Jim Chalmers accused the government of promising something which would not be implemented before the election.
The RBA also highlighted an acceleration in the declining use of cash, noting ATM withdrawals over the past three years had declined by more than 30 per cent.
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