Central Bank Digital Currencies (CBDCs) have remained highly popular and have continued being in the news. Now, it appears that some countries that have expressed disinterest in the prospect of issuing digitized tokens are also having second thoughts.
Ready to Join the CBDC Train
In the early hours of this morning, the Reserve Bank of Australia announced that it would form a consortium of institutions to explore the potential uses of a wholesale CBDC in the country.
Per the press release, the consortium will also include Ethereum development studio ConsenSys, financial services provider Perpetual, the National Australia Bank, and the Commonwealth Bank. The institutions will be developing a proof of concept for the “issuance of a tokenized form of CBDC,” and hope to have something ready in the coming months.
In the press release, the Reserve Bank confirmed that its possible CBDC will be built on the Ethereum blockchain platform. The Bank also mentioned that the asset would target wholesale users – particularly, those looking to use it for tokenized syndicated loans on a blockchain. The participants in the initiative will also look into cross-chain atomic swaps and delivery-versus-payment security settlements.
Reserve Bank Assistant Governor Michele Bullock explained that the research effort would focus on the CBDC’s risk management, efficiency, and innovation for wholesale 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,” he added.
Focusing on Wholesale Applications
The move marks a significant departure from the Reserve Bank’s stance. In September, local news sources reported that the Reserve Bank was reluctant to issue a CBDC as it believed there wasn’t a strong policy case for the assets.
The Bank reportedly highlighted the success of its New Payments Platform, which delivers real-time transaction processing for citizens and institutions.
It also noted that cash’s use in transactions is on the downtrend. Despite this, Australians aren’t relinquishing their banknotes as quickly as other countries’ citizens. In fact, demand for cash in Australia actually surged amid the coronavirus. Instead of forcing them to give up their cash, the Reserve Bank has committed to satisfying citizens’ demand as long as there is one.
This could be why the Reserve Bank has chosen to focus its asset on wholesale applications. Since citizens don’t seem to need any additional solutions for faster payments in the meanwhile, the Bank could look into an asset that would guarantee greater corporate sector efficiency.
Australia is now the second developed country to consider a wholesale CBDC. In May, the Bank of France announced the successful test of a digital Franc, explaining in its release that the asset would serve institutional players and banks. It’s unclear whether it has plans to integrate the general public later on.
Interestingly, the French CBDC project also has a partnership with ConsenSys.