Australia’s Reserve Bank Calls Other Big Banks For CBDC Project

The Reserve Bank of Australia, or RBA, is currently investigating the potential implications and uses of a wholesale form of a central bank digital currency, or CBDC, which will leverage decentralized ledger technology (DLT).

Exploring CBDCs For Wholesale Transactions

In order to make this undertaking work, the RBA has made partnerships with the National Australia Bank, and the Commonwealth Bank of Australia. Other members of this project will be ConsenSys Software, a blockchain company, as well as Perpetual, an investment advisory firm.

These five organizations will collaborate with each other in the project, with the project itself involving the development of a proof-of-concept for the issuance of a CBDC.

Exploring Modern Technologies

This prospective CBDC will have specific requirements to be deemed successful. The most prominent of these requirements is it’s expected use by participants of the wholesale market regarding the settlement, funding, and repayment of a tokenized syndicated loan, being done within a DLT platform based on Ethereum.

The RBA stated that this proof-of-concept would be leveraged for it to explore the implications of “atomic” delivery-versus-payment settlement within a DLT platform. Alongside this, the RBA will explore other potential features of a tokenized CBDC, such as automation features and programmability.

The Crypto Arms Race

The project itself is expected to be finished by the end of 2020, and stands as part of the Reserve Bank’s ongoing research into wholesale CBDCs. The parties involved are planning to issue out a report on the project and its findings within 2021’s first half.

Michele Bollock stands as the Financial System Assistant Governor of RBA, and gave a statement about the matte. He explained that this project is aimed to explore CBDCs and their implications regarding risk management, efficiency, as well as innovation regarding wholesale financial market transactions.

Bollock stated that the case for CBDCs and its usage within the market is still an open question, but the RBA is happy to collaborate with these industry partners. Through doing so, Bollock states that wholesale CBDCs and their future within the Australian payments system can be fully explored.

It seems that Australia is taking part in the CBDC arms race that has taken the world by storm. As it stands now, China is the undisputed leader in the race, with Europe playing heavy catchup. With luck, the US will start a concerted effort soon enough. It should be noted, however, that the first “state-owned” cryptocurrency had already been launched by Venezuela. The country had launched the Petro coin in order to try and circumvent sanctions, but it’s very much a marginal success.