The Australian central bank known as the Reserve Bank of Australia (RBA) has plans to launch a research project into central bank digital currency (CBDC). During the project, several use cases will be explored to ascertain the potential and the most suitable design for a potential CBDC.
Furthermore, the forms of economic benefits that the CBDC can offer will be analyzed in the research.
In the end, the most innovative use case will be discovered. Also, the business models which will be supported by the use of a CBDC will be identified. Use cases encompassing the legal, technical and regulatory framework of the CBDC are set to be explored.
To accomplish this project, RBA is working in collaboration with the Digital Finance Cooperative Research Centre (DFCRC).
The Digital Finance Cooperative Research Centre is a multi-disciplinary consortium that cuts across many industries. Presently, it’s a 10 years old program fund worth about $180 million. The fund is pulled from various industry players, universities, and the Australian government.
The pilot project will be conducted in such a way that a fraction of the user’s assets is kept aside from the other in case of a breach. Therefore, its exploration of the CBDC will be in a ring-fenced environment. Based on the project layout, it is scheduled to start and conclude in one year.
Central Banks Tries to Find Answers to The Benefit of a CBDC
Certainly, Australia RBA has joined the stream of central banks that are seeking clarity into the feasibility and technicality of a CBDC. Towards the end of Q1 alone, many central banks jumped on the CBDC bandwagon. The Central Bank of Brazil chose nine projects for its CBDC development.
A few days later, the Central Bank of the Philippines started putting structures in place for the launch of its CBDC research program. The Qatar National Bank was not left out as it also declared the intention to join the CBDC race.
According to RBA, a question that has remained in the minds of many of these banks is “the use cases for a CBDC and the potential economic benefits of introducing one.”
In the first place, countries like Australia already boast of moderately advanced, well-functioning payment and settlement systems. Hence, the question of what more benefit a CBDC offers to such economies has to be answered before a CBDC adoption is approved.
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