Australia’s central bank is currently conducting economic research on the possible benefits to its citizens of issuing an electronic currency. The regulator will identify potential use cases, and develop a pilot program on a small scale.
The Digital Currency Program at the Central Bank of Australia is being implemented by the Australian Central Bank
The Reserve Bank of Australia (RBA) announced the launch of a research program to explore the benefits of issuing a central bank digital currency (CBDC) for the country’s economy. It is anticipated that the project will take approximately one year. The work will also be done in collaboration with the Digital Finance Cooperative Research Centre(DFCRC), which is an industry group partially supported by the Australian government.
The project will clarify certain technical, legal and regulatory aspects. It also aims to identify new use cases for state-issued digital currencies as well as business model support through a CBDC.
The Bank for International Settlements conducted a survey in 2021 and found that most central banks have begun to investigate the possibility of CBDCs. The RBA acknowledged the achievements made, and encouraged the exploration of distributed ledgers.
One question that is often overlooked, in particular for countries such as Australia with well-functioning settlement and payment systems, are the cases for CBDCs.
The pilot program will include a small-scale development in a controlled environment and a pilot CBDC. This CBDC is a valid claim to the Reserve Bank. The authority stated that interested industry players will be invited by the RBA to create solutions to demonstrate how CBDC can be used for new settlement and payment services, both for households and businesses.
The RBA and DFCRC will select a range of uses cases and include them in the pilot. In a follow-up report, they will provide their evaluation. “The findings will contribute to ongoing research into the desirability and feasibility of a CBDC in Australia,” the bank said. The two institutions will be joined by the Australian Treasury participating as a member of the project’s steering committee.
Michele Bullock, Deputy Governor of Reserve Bank of Australia, described the program to be an important step in research into central bank digital currencies. The regulator wants to understand its potential benefits.
“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 maximize those benefits,” added Andreas Furche, the chief executive of the DFCRC.
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