RBA partners industry experts on CBDC research

Wholesale market participants will use the digital currency to fund, settle, and repay a tokenised syndicated loan. The test will run on an Ethereum-based blockchain technology platform. The proof-of-concept will examine "the implications of 'atomic' delivery – versus – payment settlement on a DLT platform as well as other potential programmability and automation features of tokenised CBDC and financial assets," the RBA said.

Michele Bullock, the RBA's Assistant Governor for Financial System, said the project will show how a CBDC performs in wholesale financial transactions. The bank will focus on understanding the efficiency, risk management, and innovation potential of such a currency. "Although the case for using a CBDC in the financial markets is yet to be ascertained," Bullock noted, "the RBA is glad to be working with the industry experts to look at the possible role of the digital currency in the Australian payment system."

The RBA expects to finish the project by year-end and will issue a report on the results in the first half of 2021. The central bank continues to show strong interest in CBDCs beyond this single test. In October, the RBA said it would continue evaluating whether Australia requires a digital currency. The bank will examine how one might be designed, what benefits it could offer, what policy conditions might apply, and under what scenarios significant demand might emerge.

Central banks worldwide are exploring CBDCs and their potential economic impacts. The growth of cryptocurrencies and stablecoins has become a key driver of this interest, prompting central banks to consider issuing digital versions of national currencies.