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Australian Banks’ CBDC Pilot Gains Significant Pace

Of the many different projects and initiatives to bring a central bank digital currency (CBDC) into the mainstream, Australia’s pursuit of the digital tender is now more in the spotlight than ever before. 

Half a year after announcing a joint intention to explore use cases for an Australian CBDC, the Reserve Bank of Australia (RBA) and the Digital Finance Cooperative Research Centre (DFCRC) are now gaining significant traction in the technology with the launch of the partnership’s pilot scheme.

The partnership has selected industry participants demonstrating potential use cases for a CBDC to participate in a limited-scale live pilot CBDC that leverages a real digital claim on the RBA.

Considering a range of criteria, the banks selected participating use cases that have the potential to provide insights into the possible benefits of a CBDC, including “atomic settlement of transactions in tokenised assets” as confirmed by Dilip Rao, programme director of CBDC with the DFCRC.

Assistant governor of the financial system at the RBA, Brad Jones, states that they will conduct the pilot and broader research study in parallel to serve two ends.

“[The project] 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,” he explains

“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 tokenised economy,” adds Roa.

The intricacies of this process were further outlined in a whitepaper produced by the partnership in September of last year.

The whitepaper expresses a specific desire to get to grips with the technological, legal and regulatory considerations associated with distributing a CBDC and underlines the importance of the pilot’s position in delivering this.

Two becomes three

Following the announcement, the project is to receive additional reinforcement from the Commonwealth Bank of Australia (CBA), which being one of the continent’s ‘big four’ banks, announced its support of the initiative earlier this month.

While the CBA has previously dabbled in experimenting with stablecoin technology, its decision to collaborate with the partnership confirms its interest in discovering the full scope of digital asset capabilities.

CBA’s managing director of blockchain and digital assets, Sophie Gilder, anticipates that the bank’s “years of applied innovation in blockchain will help demonstrate the potential benefits of a CBDC implementation over the longer term as envisaged by this latest and exciting development.”

“Two areas where we see the most potential are real asset tokenisation and smart payments, and we have chosen to explore use cases in those domains,” continues Gilder.

Of course, it would not go amiss to also include that the CBA was among the five industry players to engage in Project Atom; alongside the RBA.

In 2021, a team of collaborators undertook Project Atom to uncover the full potential use and implications of a wholesale form of CBDC using distributed ledger technology (DLT).

The project explored a number of issues, including access to the wider market and non-account holders, the integration of a wholesale CBDC with tokenised assets on interoperable DLT platforms and the viability of this process.

Author

  • Tyler is a fintech journalist with specific interests in online banking and emerging AI technologies. He began his career writing with a plethora of national and international publications.

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