The Reserve Bank of Australia completed a pilot project of a central bank digital currency (CBDC), identifying four key areas where the introduction of the digital Australian dollar (eAUD) could be beneficial.
The Reserve Bank of Australia (RBA) and the Digital Finance Collaborative Research Center (DFCRC) released the results of the pilot project of the central bank digital currency (CBDC). The RBA announced the completion.
The report details several specific CBDC use cases and identifies four main areas where the digital currency could be beneficial. In particular, the document highlights the CBDC’s potential in several areas:
- Enabling smart payments. The CBDC would enable sophisticated payment transactions that are currently not supported by existing payment systems.
- Popularizing asset tokenization. The CBDC could instantly process transactions using tokenized assets, increasing investor participation and financial market liquidity in the region.
- Supporting innovation in asset markets. The CBDC could spur innovation in the private digital money sector by enabling interoperability and standardization of tokenized bank deposits and regulated stablecoins. The CBDC may also serve as the primary means of settlement for settling payments using commercial bank money.
- Improving the payment system’s sustainability. The CBDC could provide households and businesses with an alternative way to make e-payments without using a bank account and enable offline payments when there’s no electricity or Internet access. Additionally, access to a digital currency independent of a commercial bank account could bring social benefits to certain groups of people who have difficulty using banking services.
The RBA’s report also noted that the pilot project identified several legal and regulatory issues that need to be resolved before the full-scale adoption of the CBDC. These matters primarily relate to the legal status of the future digital currency. Analysts also emphasized the importance of creating regulatory sandboxes to stimulate innovation.
The RBA’s main conclusions from the conducted CBDC Australia pilot were:
- the CBDC introduction may improve efficiency and sustainability in some areas of the local payments ecosystem;
- further research is required to fully realize the CBDC’s potential benefits.
The digital Australian dollar pilot project was launched a year ago, and financial institutions, FinTech companies, and government regulators joined the CBDC trials six months ago.
