RBA announces plans for CBDC research

RBA announces plans for CBDC research

By Benson Toti - min read

The collaboration will work on a POC for issuing a tokenized form of CBDC

The central bank of Australia announced on Monday that it is partnering with the Commonwealth Bank, the National Australia Bank, Perpetual, and ConsenSys Software to consider the possible use and implications of a wholesale form of Central Bank Digital Currency (CBDC) using distributed ledger technology (DLT).

The Reserve Bank of Australia (RBA) revealed that the project involves the development of a proof of concept (POC) for the capacity to issue a tokenized form of CBDC for use by wholesale market participants for the funding, settlement, and repayment of a tokenized syndicated loan on an ethereum-based DLT platform.

The RBA also said that the project will also look into other potential programmability and automation features of a tokenized CBDC and financial assets.

Michele Bullook, the Assistant Governor of the RBA, stated that the bank is also conducting more in-depth analyses on CBDCs.

“We are aiming to explore the implications of a CBDC for efficiency, risk management and innovation in wholesale financial market transactions. 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 explained.

The project is expected to be finished by the end of 2020 and a report detailing the results of the project will be issued sometime during the first half of the next year.

This move is a part of the RBA’s efforts to change its perspective on CBDC police. On October 14th, the RBA’s head of payments policy announced that the bank would continue its research on CBDCs even though the financial institution had stated previously that there was no strong policy case for issuing one.

“We will be continuing to consider the case for a CBDC, including how it might be designed, the potential benefits and policy implications, and the conditions in which significant demand for a CBDC might emerge.” Tony Richards stated.

The RBA has pointed to the success of Australia’s real-time New Payments Platform as an alternative to issuing a CBDC, and explained that it is willing to provide access to traditional banknotes for as long as Australians would like to keep using them. However, Richards revealed that it is looking into factors that could help shape a potential CBDC, such as whether it would be account-based or token-based and whether it could be used offline.

The bank is also researching the technological and policy implications of wholesale CBDCs.