Where Pacific Central Banks Stand on CBDCs
Central bank digital currencies have moved, in the space of five years, from academic curiosity to active policy consideration for the majority of the world's central banks. The Bank for International Settlements estimates that more than 90% of central banks are now researching or developing CBDCs. The Pacific is not exempt from this trend. The Reserve Bank of Fiji has been actively monitoring CBDC developments and engaging with regional and international working groups. The Bank of Papua New Guinea has explored CBDC concepts in the context of its financial inclusion mandate. The Central Bank of Solomon Islands, the National Reserve Bank of Tonga, and the Central Bank of Samoa have all engaged with CBDC research through their participation in South Pacific central bank governor forums. None of these central banks has yet committed to a CBDC issuance. But the direction of travel is clear, and the question has shifted from whether to when and how.
What the RBA Pilot Taught Us
Australia's central bank conducted its CBDC pilot — Project Acacia — examining specific use cases for a wholesale and retail Australian CBDC. The conclusions were nuanced, but several lessons are directly relevant to Pacific CBDC design. The pilot confirmed that a CBDC's value depends almost entirely on its interoperability with existing payment infrastructure. A digital dollar that cannot interact with existing bank accounts, payment apps, and merchant terminals is not more useful than existing payment instruments. The pilot also highlighted the critical importance of privacy design. The technology that makes a CBDC programmable is also the technology that creates the most significant public concern about surveillance. Getting the privacy architecture right is foundational to public acceptance. Finally, the pilot demonstrated that the most compelling CBDC use cases in an economy like Australia's are not in everyday retail payments but in wholesale settlement, cross-border payments, and smart contract applications.
The Pacific Context for CBDCs
In the Pacific, the compelling CBDC use cases are different from Australia's, precisely because the baseline infrastructure is different. Remittances are the most obvious candidate. A Pacific CBDC that could receive international transfers at the speed of a blockchain transaction and the cost of a few cents would directly address the 10.1% average remittance cost that Pacific households currently pay. The interoperability requirement is significant: the CBDC would need to connect with the Australian payment system, requiring the kind of cross-border CBDC framework that the BIS and G20 have been developing. Government payments are the second compelling use case. Pacific governments distribute social welfare, disaster relief, and agricultural support through mechanisms that are often slow, leaky, and difficult to audit. A CBDC-based payment infrastructure would allow governments to disburse funds directly to citizens' digital wallets in real time, with full auditability. The third use case is trade finance — specifically, the financing of small-scale inter-island trade that forms the backbone of many Pacific economies.
Risks and Mitigation
Disintermediation of mobile money. The biggest near-term risk of a Pacific CBDC is that it competes with rather than complements the mobile money infrastructure that has taken fifteen years to build. The design imperative is to build CBDCs on top of existing mobile money infrastructure — using mobile money operators as distribution agents, not replacing them. Infrastructure requirements. A CBDC that requires internet connectivity to use is not a Pacific CBDC — it is a CBDC for urban Pacific residents. Genuine Pacific CBDC design requires offline transaction capability, feature phone access, and resilience to the infrastructure failures that Pacific communities face with regularity. Dollarisation risk. For smaller Pacific economies that already experience significant US dollar usage, a Pacific CBDC needs to be designed carefully to avoid accelerating the displacement of local currency.
Australia's Opportunity to Shape Regional CBDC Architecture
Australia has a genuine window of opportunity to shape Pacific CBDC development — but that window is not indefinitely open. The design choices being made now, in working groups and research programmes that Australia could be actively participating in, will determine the architecture of Pacific monetary infrastructure for a generation. The RBA's Project Acacia experience gives Australia something genuinely valuable to contribute to Pacific CBDC discussions: hard-won lessons about what works and what does not, developed through real pilots rather than theoretical modelling. Australia's FinTech sector adds implementation capability. And Australia's existing relationships with Pacific central banks — built through decades of development assistance and the South Pacific central bank governor network — provide the diplomatic infrastructure to have these conversations. Engaging actively in Pacific CBDC development is not charity. It is infrastructure diplomacy — the kind that shapes trade relationships, payment standards, and economic architecture for decades.