Contributing to the expanding arena of the central bank digital currencies (CBDCs), the Reserve Bank of Australia (RBA) has announced its latest move. The Australian central bank becomes the latest entrant into the CBDC’s real-life utility.
On Thursday, the RBA announced its plan to launch a “live pilot” of a CBDC, and the move is said to be in response to the growing interest in digital currencies and the need for a more efficient payment system. For this, the bank also collaborated with the Digital Finance Cooperative Research Centre (DFCRC) on a research project to explore the utilities and economic benefits associated with CBDC.
According to the report published by the central bank, the CBDC research project received submissions from various participants. The project “involves selected industry participants demonstrating potential use cases for a CBDC using a limited-scale pilot CBDC that is a real digital claim on the Reserve Bank.”
Reportedly, the central bank’s partners for the pilot projects include the Australia and New Zealand Banking Group Limited (ANZ), Mastercard, Monoova, the Australian Bond Exchange, DigiCash, Commonwealth Bank, and others. The table below is taken from the website of RBA and shows the utilities that vary from offline payments to “trusted Web3 commerce” and several more.
The announcement also featured views of the top executives at the RBA. Brad Jones, Assistant Governor (Financial System) at the RBA expressed the institution’s enthusiasm towards the Australian CBDC. He also revealed that the CBDC pilot involves diversity among the use case providers which will appropriately reflect the interests of the broader financial system.
We are delighted with the enthusiastic engagement of industry in this important research project. It has also been encouraging that the use case providers that have been invited to participate in the pilot span a wide range of entities in the Australian financial system, from smaller fintech to large financial institutions.
Jones also counted on the pilot to deepen the authorities’ understanding of the CBDC and its potential benefits. In his words:
The pilot and broader research study that will be conducted in parallel will serve two ends – it will contribute to hands-on learning by industry, and it will add to policymakers’ understanding of how a CBDC could potentially benefit the Australian financial system and economy.
Alongside Jones, Dilip Rao, the program director of CBDC with the DFCRC said that the variety of use cases proposed covers a range of problems that could be addressed by CBDC. According to him:
The variety of use cases proposed covers a range of problems that could potentially be addressed by CBDC, including some that involve the use of CBDC for atomic settlement of transactions in tokenized assets. The process of validating use cases with industry participants and regulators will inform further research into design considerations for a CBDC that could potentially play a role in a tokenized economy.
Central banks worldwide have explored the possibility of issuing CBDCs. Some have already launched pilot programs to test their feasibility. Recently, the People’s Bank of China (PBOC) rolled out the pilot program of its CBDC in several cities across the country. To facilitate mass adoption, Chinese cities have also announced huge giveaways.
For the entirety of this week, the British authorities have also spoken about their digital Pound very frequently. Ben Broadbent, deputy governor for monetary policy and the Bank of England (BoE) said that the central bank is paying keen attention to rolling out its CBDC. The bank along with the Treasury launched its consultation paper in early February.