A little over a month after its pilot into central bank digital currencies (CBDC) began, the Reserve Bank of Australia has released a new whitepaper that explains its approach in more detail.
The Reserve Bank’s latest whitepaper, which was produced alongside its development partner, the Digital Finance Cooperative Research Centre (DFCRC) and titled ‘Australian CBDC Pilot for Digital Finance Innovation’, explains the objectives and approach of the project, including the design of the pilot CBDC that will be utilised by industry participants to explore use cases for a CBDC.
Central banks all over the world are increasingly exploring the feasibility and possible technical design of CBDC, and in particular, the potential use of distributed ledger technology.
Having relatively modern and well-functioning payment and settlement systems already in place, Australia is now turning its attention toward the use cases for a CBDC and the potential economic benefits of introducing one.
The Reserve Bank is working with the DFCRC to turn its focus to innovative use cases and business models that could be supported by the issuance of a CBDC, while also taking an opportunity to further understand some of the technological, legal and regulatory considerations associated with distributing one.
Expected to take about a year to complete, the project will develop a limited-scale CBDC pilot that will operate in a ring-fenced environment for a period of time and is intended to involve a pilot CBDC that is a real claim on the Reserve Bank.
The pilot is expected to engage industry participants in the development of specific use cases that demonstrate how a CBDC could facilitate value-added payment and settlement services to households and businesses.
The Australian Treasury is participating as a member of the steering committee for the project, as part of its joint work with the Reserve Bank on exploring the viability of a CBDC in Australia.
“This project is an important next step in our research on CBDC,” comments Michele Bullock, the Reserve Bank’s deputy governor.
“We are looking forward to engaging with a wide range of industry participants to better understand the potential benefits a CBDC could bring to Australia,” she continues.
Dr Andreas Furche, CEO of the DFCRC, added: “CBDC is no longer a question of technological feasibility.
“The key research questions now are what economic benefits a CBDC could enable, and how it could be designed to maximise those benefits.”