Reserve Bank of Australia Partners With Banks, Tech Firms to Explore CBDC

As per a notification made by the Reserve Bank of Australia (RBA), the financial institution is collaborating with the National Australia Bank, Commonwealth Bank, the financial services provider Perpetual, and blockchain focused tech company ConsenSys on a venture to study the likely utilization of a wholesale central bank digital currency in the country utilizing “Ethereum-based distributed ledger technology.”

The RBA notified that it would be conducting research on the creation of a PoC (Proof-of-Concept) for “the issuance of a tokenized form of CBDC.” It particularly mentions wholesale market protagonists likely utilizing the digital currency for tokenized pooled loans on a DLT platform and studying the effects of delivery-versus-payment security reconciliations with cross-chain atomic interchanges.

Michele Bullock, RBA Governor, said “With this project we are aiming to explore the implications of a CBDC for efficiency, risk management and innovation in wholesale financial market transactions.”

He further stated:

“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.”

The initiative reflects a turn-around in the stance of the RBA with respect to CBDC policy. On October 14, the chief of payments policy at the RBA stated that the bank will carry on with research of CBDC in spite of a September notification underlining the lack of adequate empirical data backing the need for development and issue of CBDC.

As substitutes to the development and launch of a CBDC, the RBA has highlighted the fruition of the effectual, instantaneous state-of-the-art Payments Platform, and declared that it is ready to ensure access to fiat currencies “for as long as Australians wish to keep using them.”

The central bank stated that the venture will be completed by the end of 2020 and it will publish a report next year.