- Australia takes a different approach regarding CBDCs by focusing on wholesale use cases.
- RBA board meeting on monetary policy decision on Tuesday is expected to shed more light on the new development.
The Reserve Bank of Australia has announced a strategic partnership with various parties. The National Australia Bank, Commonwealth Bank, ConsenSys Software, and Perpetual will participate in a project to dig deeper into research on the potential use and the implications of a central bank digital currency (CBDC).
Ethereum blockchain the focus of RBA's research
According to the regulator, the task is already underway, exploring the use of a digital currency in the wholesale space. The research is currently dedicated to the use of distributed ledger technology (DLT), precisely executing it on the Ethereum blockchain.
The idea of wholesale-based CBDC is to support the issuance of a tokenized form of the national currency that can be utilized by participants in the wholesale market. Its development will integrate a proof-of-concept (POC) algorithm ensuring that funding, settlement and payments occur seamlessly.
The POC will also look into the effects of an “‘atomic’ delivery-versus-payment on a DLT platform as well as other automation features of tokenized CBDC and financial assets.” The Assistant Governor (Financial System), Michele Bullock, explained that the new direction is designed to put risk management protocols in place and bring forth innovation in wholesale markets. However, Bullock clarified that:
The case for the use of a CBDC in these markets remains an open question; we are pleased to be collaborating with industry partners to explore if there is a future role for a wholesale CBDC in the Australian payments system.
A Board meeting scheduled on November 3 could shed some light on the matter. Meanwhile, Australia appears to be taking a different approach regarding the growing interest in CBDCs around the world. For now, Ethereum blockchain is at the center of the research, especially with the involvement of ConsenSys.
China’s digital currency is designed to reduce the use of cash in the region. Japan is yet to decide the direction its national digital currency will take, although the central bank said that the people would guide the matter. On the other hand, the United States has not made plans for a CBDC but the Federal Reserve Bank chair, Jerome Powell, recently said that it is focused on getting it right and not being the first.
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