The Reserve Bank of Australia has announced a research project that will explore central bank digital currency (CBDC) use cases for the country.
“This project is an important next step in our research on CBDC,” said Michele Bullock, deputy governor of the RBA. “We are looking forward to engaging with a wide range of industry participants to better understand the potential benefits a CBDC could bring to Australia.”
The RBA will now embark on a year-long research project to explore use cases for CBDC, partnering with the Digital Finance Cooperative Research Centre (DFCRC).
The DFCRC is a ten-year, $180m research programme funded by industry partners, universities and the Australian government.
“CBDC is no longer a question of technological feasibility,” said Dr Andreas Furche, the DFCRC’s chief executive. “The key research questions now are what economic benefits a CBDC could enable, and how it could be designed to maximise those benefits.”
According to the RBA, the project, which is expected to take a year to be completed, poses an opportunity to further understand some of the technological, legal and regulatory considerations associated with a CBDC.
It will involve the development of a limited-scale CBDC pilot that will operate in a ring-fenced environment for a period of time and is intended to involve a digital Australian dollar that is a real claim on the central bank.
Industry stakeholders who are interested in taking part will be invited to develop specific use cases that demonstrate how a CBDC could be used to provide innovative and value-added payment and settlement services to end users, both businesses and consumers.
Subsequently, the central bank and the DFCRC will select a range of different use cases to participate in the pilot, based on their potential to provide insights into the possible benefits of a CBDC.
Following the pilot, the DFCRC will report back on the findings from the project, including an assessment of the various use cases developed.
Australia has been slower than other nations to take an interest in CBDCs, considering ongoing investigatory work by authorities in jurisdictions such as the EU, Sweden and Hong Kong; extensive testing in China; as well as full rollout in a handful of markets, including Nigeria.
Its central bank may also not yet be convinced by the prospects of a digital Australian dollar. For example, Philip Lowe, the governor of the RBA, suggested last month that crypto-assets issued by private companies may end up having more use cases.