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Reserve Bank of Australia initiates research project on CBDC

Australia
Australia

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The Reserve Bank Of Australia (RBA) has announced plans to explore possible use cases for its proposed Central Bank Digital Currency (CBDC). The financial institution will work on the study program with the Digital Finance Cooperative Research Centre (DFCRC).

According to an official announcement, the RBA revealed the study would focus on innovative use cases and business models. These two studies will see the RBA and DFCRC work together to determine how the CBDC will be utilized effectively. During the study, the RBA will consider the technological, regulatory, and legal dimensions of the CBDC.

The RBA disclosed that the experimentation would be limited to certain environments while it would last for a year. According to the plan, prominent stakeholders will submit their opinion on utilizing the CBDC. However, their opinions are subjected to the evaluation of the RBA and DFCRC. The RBA added that their opinions would partake in the study and make up a part of its special report. 

Furthermore, the special report will become available in the coming months, giving complete detail about the project. The bank’s deputy governor, Michele Bullock, reflected on the development. Bullock describes the latest development as a major step in the RBA’s study on CBDC. The deputy governor added that the RBA hopes to engage significant stakeholders to participate in the process. Bullock believes their participation will help the RBA comprehend the good incentives a CBDC will offer the country.

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The trend of experimenting with the case uses of CBDC and its adoption is gradually gaining momentum. Central Banks and global financial institutions are now looking at the possibility of having their fiats in a virtual version. Recently, the Central Bank of Thailand revealed plans to study the risk and benefits of establishing the regulatory framework for its CBDC.

Similarly, the BOT, like RBA, aims to include private and public stakeholders in its two dimension pilot project. With that, the BOT will effectively explore how to utilize its CBDC and determine the best policy to set up for it as well. The pilot program, as revealed, will come in two dimensions, namely Foundation and the Innovative track.

Recall that last year, RBA announced a plan to explore the potential implications of a wholesale CBDC via distributed ledger technology (DLT). With the DLT, transactional records regarding the CBDC will be recorded on decentralized vaults against a centralized one. 

The RBA revealed that the innovation would include adopting proof-of-concept to issue a tokenized type of the CBDC. Allowing wholesale market participants to utilize the CBDC as a means of payment and loan servicing on an Ethereum-supported DLT outlet.

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