The Reserve Bank of Australia (RBA) is ready to begin testing a central bank digital currency (CBDC) with financial institutions, FinTech companies, and government regulators. The primary goal will be to explore potential use cases and economic benefits of the digital Australian dollar (eAUD).

Reserve Bank of Australia to Test CBDC Use Cases

The Reserve Bank of Australia, in collaboration with the Digital Finance Cooperative Research Centre (DFCRC), will begin a “live pilot” of the CBDC. The pilot will begin on March 31, 2023, and last for a month.

The RBA will work with the DFCRC to explore various options for using the digital Australian dollar (eAUD), including:

  • offline payments;
  • tokenized asset trading;
  • corporate bond settlement;
  • tokenized FX settlement;
  • liquid assets securities trading;
  • tax automation;
  • CBDC interoperability with “trusted Web3 commerce.”

Various financial institutions will be involved in the pilot project. The RBA plans to study CBDC possibilities with the participation of the Commonwealth Bank and Australia and New Zealand Banking Group (ANZ) and also use the opportunities of Mastercard. The project will involve the Australian Securities Exchange (ASX) and the Australian Bond Exchange (ABE).

According to Dilip Rao, Technical Director of the Australian CBDC project, the pilot testing of digital currency options is designed to cover a number of economic problems that “could potentially be addressed” by CBDC. He said the “live pilot” will give the RBA the tools to further plan the structure of the national digital currency.

Brad Jones, Assistant Governor of the RBA, said the joint participation of representatives from major financial institutions, FinTech companies, and government regulators in the pilot project would accomplish two global goals at once: to promote “hands-on learning” for financial market participants and to broaden policymakers’ understanding of the technology. “A CBDC could potentially benefit the Australian financial system and economy,” he concludes.

The digital Australian dollar pilot was launched in a “ring-fenced environment” in the summer of 2022. That’s when it became known about the RBA’s partnership with the DFCRC and plans to complete CBDC testing in 2023.

Author: Ana Bustos García
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