RBA pilot to explore the benefits of a CBDC

  • By Zilla Efrat

The Reserve Bank of Australia, together with the Digital Finance Cooperative Research Centre (DFCRC), is set to launch a limited-scale pilot project to explore use cases for a central bank digital currency (CBDC) in Australia.

The DFCRC is a 10-year, $180 million research program tasked with developing and harnessing the opportunities arising from the digitisation of assets. It is funded by industry partners, universities and the government.

“This project is an important next step in our research on CBDC. 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,” says Michele Bullock, Deputy Governor of the RBA.

According to the RBA, much research has been done by central banks, including itself, into the feasibility and possible technical design of CBDC, especially the potential use of new technologies such as distributed ledger technology.

However, a question that has received less attention, particularly in countries like Australia that already have relatively modern and well-functioning payment and settlement systems, is the use cases for a CBDC and the potential economic benefits of introducing one.

The RBA says the pilot project will help address this gap by focusing on innovative use cases and business models that could be supported by the issuance of a CBDC.

The project will also be a chance to further understand some of the technological, legal and regulatory considerations associated with a CBDC.

The project is expected to take about a year to complete. The CBDC pilot will operate in a ring-fenced environment and will be a real claim on the RBA.

Interested industry participants will be invited to develop specific use cases that show how a CBDC could be used to provide innovative and value-added payment and settlement services to households and businesses.

The RBA and the DFCRC will then choose a range of different use cases to participate in the pilot, based on their potential to provide insights into the possible benefits of a CBDC.

A report on the project’s findings, including an assessment of the various use cases developed, will be published at the end of the pilot. The findings will also contribute to ongoing research into the desirability and feasibility of a CBDC in Australia.

The RBA says it will publish a paper in the next few months that will explain the aims and approach of the project in more detail and how the industry can participate.