Australia Issues White Paper for Central Bank Digital Currency – Finance Bitcoin News

The Reserve Bank of Australia has begun to investigate the benefits of creating a digital currency for central banks. The white paper was published by the central bank and invites interested parties with suggestions and proposals to join it in identifying its objectives.

Central Bank of Australia: Pilot CBDC until Middle of 2023

The Reserve Bank of Australia has begun to investigate potential use cases for the digital Australian dollar. It’s collaborating on the project with the Digital Finance Cooperative Research Centre (DFCRC), a research program funded by the government and the financial sector. They released this week a whitepaper for central bank digital currencies (CBDC).

The document titled “Australian CBDC Pilot for Digital Finance Innovation” details the main objectives of the initiative and explains the design of the new currency. Members of the industry have been invited to propose use cases that have the potential to improve the functioning of Australia’s economy and financial system, the RBA announced.

According to the monetary policy regulator, one of their key tasks was also to explore possible business models that might be supported by CBDC. This pilot project launched in July, and is expected to be finished in the middle of 2023. Financial authorities will have a greater understanding of technological, legal, regulatory and other aspects related to the issue and use central bank digital currencies.

According to the RBA, valuable use cases in wholesale or retail will be considered for the pilot. This data will then be used by the RBA to determine the feasibility of an Australian digital currency. The project welcomes a wide variety of stakeholders, such as financial institutions, tech firms, government agencies and fintech companies.

Regulators such as the Australian Securities and Investments Commission (ASIC) and the Australian Transaction Reports and Analysis Centre (AUSTRAC), the country’s financial intelligence agency, will also be engaged and will work on any regulatory implications that may arise during the testing.

Only Australian Digital Currency is available to residents of Australia and companies within the country during Pilot Phase

Australian’s central bank stated that the pilot digital currency, also known as eAUD, would be under its responsibility and will be denominated Australian dollars. RBA will decide the amount that coins can circulate, and will take into account requirements for selected providers.

Only Australian citizens and legal entities will be able hold eAUD. The holdings won’t bear interest. An approved provider of use cases or know-your customer provider will invite all end users. Both custodial as well as noncustodial wallets will hold the CBDC.

In particular, the Reserve Bank of Australia stated that their research does not intend to eliminate paper money. “The RBA is committed to ensuring Australians continue to have good access to physical cash for as long as people need or want to use it,” the authority emphasized.

Many central banks have begun exploring digital currencies in light of the increasing popularity of cryptocurrency over the last few years. Some have even launched pilot CBDC programs.

In mid-August, Australia’s securities watchdog insisted that the increased popularity of cryptocurrencies makes a “strong case for regulation.” ASIC quoted a survey, according to which 44% of the country’s retail investors held crypto in late 2021. Later in August, Australia’s Treasury revealed a plan for stocktaking crypto holdings.

Is Australia on track to match other central bank digital currencies developed countries? Comment below to share your views.

Lubomir Tassav

Lubomir Tassev is a journalist from tech-savvy Eastern Europe who likes Hitchens’s quote: “Being a writer is what I am, rather than what I do.” Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.