The world is slowly but steadily moving closer to the numerous Central Bank Digital Currency [CBDC] roll-outs.
The Reserve Bank of Australia [RBA] has announced that it is partnering with the Commonwealth Bank, National Australia Bank, Perpetual and ConsenSys Software, a blockchain technology company, on a project to explore the potential use and implications of the wholesale form of the Central Bank Digital Currency [CBDC] using distributed ledger technology [DLT].
According to the official announcement, this collaborative project is essentially part of the ongoing research on “wholesale” CBDC at the Australian financial institution. The RBA also noted that the project will involve the development of a Proof-of-Concept [PoC] for the issuance of a tokenized form of CBDC which can be used by the wholesale market participants for the purpose of funding, settlement, and repayment of a tokenized syndicated loan to the Ethereum-based DLT platform.
The PoC will be leveraged to explore the implications of ‘atomic’ delivery-versus-payment settlement on a DLT platform as well as other potential programmability and automation features of tokenized CBDC and financial assets, the official release noted.
Following the latest development, RBA’s Assistant Governor [Financial System] Michele Bullock asserted,
“With this project we are aiming to explore the implications of a CBDC for efficiency, risk management and innovation in wholesale financial market transactions. While the case for the use of a CBDC in these markets remains an open question, we are pleased to be collaborating with industry partners to explore if there is a future role for a wholesale CBDC in the Australian payments system”
Notably, RBA further revealed that the CBDC project is expected to be completed around the end of this year, and the parties aim to publish a report on it and its main findings during the first half of 2021.
Central Bank Digital Currency [CBDC] in Australia
This news comes around two weeks later the Reserve Bank of Australia revealed research on a potential wholesale CBDC right after its comments stating that there was no need for one. The RBA was highly skeptical and was not convinced of a strong policy case for issuing a CBDC around mid-September.
Tony Richards, Head of Payments Policy at the RBA, had previously asserted,
“We will be continuing to consider the case for a CBDC, including how it might be designed, the potential benefits and policy implications, and the conditions in which significant demand for a CBDC might emerge.”
Australia’s latest dive to CBDC comes at a time when central banks all across the globe were looking at CBDCs and to explore the need to create and issue a tokenized version of their respective national currencies. China is perhaps the furthest along, while other nations were still in the early stages of determining whether a CBDC is even desirable.
More recently, the Bahamas, which happens to be an island nation in the West Indies, officially launched a new central bank digital currency, the so-called Sand Dollar on the 20th of October. With this, the country of 393,000 people became the first to make CBDC available to all residents.