The Reserve Bank and the Digital Finance Cooperative Research Centre (DFCRC) are collaborating on a project to explore use cases for a central bank digital currency (CBDC) in Australia.
Central banks, including the Reserve Bank, have conducted extensive research into the viability and potential technological design of CBDC, focusing on the potential usage of cutting-edge technologies like distributed ledger technology. The use cases for a CBDC and the possible economic benefits of implementing one are issues that have gotten less attention to date, particularly in nations like Australia that already have quite contemporary and efficient payment and settlement systems.
“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,” Reserve Bank Deputy Governor Michele Bullock said.
The project entails the creation of a pilot CBDC on a small scale that will function in a ring-fenced environment for some time and is intended to involve a pilot CBDC that is a legitimate claim on the Reserve Bank.
Interested industry partners will be invited to develop specific use cases illustrating how a CBDC could be used to give innovative and value-added payment and settlement services to households and businesses. Based on their potential to offer insights into the potential advantages of a CBDC, the Bank and the DFCRC will choose various use cases to take part in the trial. A report on the project’s findings will be published. It will contribute to ongoing research into the desirability and feasibility of a CBDC in Australia.
“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,” DFCRC CEO Dr. Andreas Furche said.
The Australian Treasury is participating as a member of the project’s steering committee as part of a joint effort with the Reserve Bank to explore the feasibility of a CBDC in Australia.
A paper explaining the project’s objectives and approach in more detail and how industry participants can be involved will be published in the coming months.