Australia’s central bank, the Reserve Bank of Australia (RBA), has completed its pilot program exploring the potential use cases of a central bank digital currency (CBDC).
The research project, carried out in conjunction with the Digital Finance Cooperative Research Centre (DFCRC), involved 16 selected industry participants, including Mastercard, Australian Bond Exchange, and Fame Capital.
This announcement came with a new report, detailing how the central bank and the Digital Finance CRC were able to engage with the financial industry to study the use cases for a CBDC.
Australian CBDC Could Compliment Existing Payment Systems: Report
In a report published on Wednesday, August 23, the Reserve Bank of Australia and the Digital Finance Cooperative Research Centre revealed their findings from the recently concluded pilot program. The document delves into the potential use cases of a digital Australian dollar and how it could potentially improve existing payment structures.
The study found that a central bank-issued digital currency could offer benefits to Australian households and businesses in various aspects. One of these areas includes the facilitation of “smarter” payments, where a tokenized CBDC enables a range of complex payment frameworks not currently supported by existing payment systems.
Other areas highlighted in the 44-page document include support of financial innovation in other asset markets, like traditional debt securities markets; enhancing resilience and inclusion in the broader digital landscape; and the promotion of private digital money innovation.
Specifically, it was revealed that a central bank-issued digital currency can benefit the use of tokenized bank deposits or asset-backed stablecoins.
“In this role, CBDC could serve a similar function to settlement balances held at the central bank for settling payments made using commercial bank money,” the report read.
Is An Australian CBDC On The Horizon?
In the report, the Reserve Bank of Australia and the Digital Finance CRC mentioned that the pilot program raised some legal, regulatory, technical, and operational issues regarding the use of a digital Australian dollar. According to the central bank, these questions require further consideration as part of future research on CBDC in Australia.
With this, it appears that the launch of a central bank-issued digital currency might take a few more years. While the RBA reiterated that a CBDC has the potential to improve the efficiency of the Australian payments system, it believes that more research is needed.
Brad Jones, assistant Governor at the RBA, acknowledged in a statement that the study offered valuable insights into how a CBDC could potentially unlock benefits for the Australian financial system. However, he noted that the key findings from the pilot project will only help to shape the next phase of RBA’s research program.
It is worth mentioning that central bank digital currencies continue to gain traction in various countries across the world. In one of the latest developments, the Central Bank of Honduras initiated a pilot study toward the potential launch of its own CBDC.