The Reserve Bank of Australia has announced that it is joining the Digital Finance Cooperative Research Centre (DFCRC) to study use cases for a central bank digital currency (CBDC) in Australia.
The Central Banks including the Reserve Bank of Australia has already engaged in significant research and the exploration of the feasibility and possible technical framework of CBDC. The banks are particularly researching the potential scope of innovative technologies like distributed ledger technology.
The use cases for a CBDC and the possible economic advantages of launching CBDC is one question that still hasn’t been addressed properly.
Along with DFCRC, the Reserve Bank will focus on how the issuance of CBDC will further support new use cases and business models. The new project will also open new doors to further comprehend some of the technological, legal and regulatory reflections of CBDC.
The research project is expected to be completed in about a year. The research study will include the development of a limited-scale CBDC pilot that will function in a ring-fenced environment for some time.
Apart from this, interested industry members will be invited to prepare use cases for illustrating how CBDCs could provide novel and value-added payment and other settlement services to the domestic sector and commercial sectors.
The Bank and the DFCRC will choose several different use cases to participate in the pilot test. The use cases would be based on their capability to provide insights into the possible perks of a CBDC.
A concluded report on the findings from the project will be published. The report will contribute to the already existing research done on CBDCs in Australia.
The Australian Treasury too is an active member of the committee for the project and will help in studying the feasibility of CBDCs in the country.
A paper is expected to publish in the coming few months to explain the goals and approach of the project in detail. The paper will also inform how industry participants can engage.
Michele Bullock, Deputy Governor of the Reserve Bank said, ‘This project is an important next step in our research on CBDC. 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’.