To assess the advantages of issuing a central bank digital currency (CBDC) for the nation’s economy, the Reserve Bank of Australia (RBA) announced the beginning of a research program. The research will likely last a year and will be carried out in collaboration with the Digital Finance Cooperative Research Centre (DFCRC). This business organization receives government funding from Australia in part.
The project will try to uncover creative use cases for a state-issued digital currency and business concepts that could be promoted through a CBDC, the monetary authority said in a statement. It will also clarify some legal, regulatory, and technological elements.
Most central banks are looking into the viability of CBDCs, per a poll by the Bank for International Settlements in 2021. The RBA also disclosed, as reported by Reuters, that a limited-scale test will be developed as part of the program in a closed setting with a prototype CBDC that is a legitimate claim on the Reserve Bank.
The authority noted that interested industry partners would be asked to create solutions showing how a CBDC might be utilized to offer new payment and settlement services for households and enterprises.
The RBA and DFCRC will choose a variety of use cases to be included in the trial. Their evaluation will be included in a later report. “The findings will contribute to ongoing research into the desirability and feasibility of a CBDC in Australia,” the bank stated. The Australian Treasury will participate as a member of the project’s steering committee, joining the two institutions.
According to Reserve Bank of Australia Deputy Governor Michele Bullock, the experiment is a critical next step in studying central bank digital money as the regulator looks to understand the potential advantages better.
According to Andreas Furche, CEO of the DFCRC, “CBDC is no longer a question of technological feasibility. The key research questions now are what economic benefits a CBDC could enable, and how it could be designed to maximize those benefits,”
