The Reserve Bank of Australia announced on November 2 that it will be forming a partnership with software company ConsenSys, financial service provider Perpetual, and with the National Australia Bank on a project to study the possible utilization of a wholesale CBDC in Australia. It’ll be doing this by making use of “Ethereum-based distributed ledger technology.”
A Central Bank Digital Currency (CBDC) makes use of a blockchain type token to denote a digital form of government-issued currency of a specific nation or a region. It is issued and controlled by the financial authority of the country. According to The Reserve Bank of Australia (RBA), this study will “explore if there is a future role for a wholesale CBDC in the Australian payments system,”
“Issuance of a tokenized form of CBDC“
Further, the Reserve Bank of Australia said it would be exploring the development of experiment-based evidence for “the issuance of a tokenized form of CBDC.” It particularly stated that wholesale market users on the DLT platform can possibly utilize the digital currency for tokenized simultaneous loans and additionally research the effects of delivery as opposed to payment security arrangements accompanied by cross-chain atomic swaps.
“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,”Assistant Governor of The Reserve Bank of Australia, Michele Bullock
Australia Reversing Course
This development is another in a series of about-turns for the RBA in regards to CBDC plans. On October 14, the chief of payments policy at The Reserve Bank of Australia had stated it would carry on the study of CBDC, in spite of the monetary authority previously expressing that there wasn’t a capable policy for releasing one in September.
As substitutes for issuing CBDC, the bank has directed towards the favorable outcomes of the country’s systematic, real-time latest Payments Platform, and expressed its willingness to give the right to use fiat banknotes “for as long as Australians wish to keep using them.”
RBA has stated that the project will complete its course by the year-end and it will be releasing a review in 2021.