All you need to know about CBDC pilot in Australia
The development of a CBDC is being investigated in more than 114 nations, including Australia. Let's learn more about it!
A paper is available online to outline the use case suggestions and the relevant providers chosen to participate in the Reserve Bank of Australia's (RBA) continuing research of an Australian central bank digital currency (CBDC).
In order to collaborate on this initiative and the subsequent research, the RBA and the Digital Finance Cooperative Research Centre (DFCRC) have invited 14 businesses from the traditional banking and digital asset industries. This is a significant move for Australia since it may open the market to digital currencies and their benefits.
In August 2022, the e-AUD research project got underway. It requested prospective use cases from financial institutions for the initiative. The RBA received a number of prospective uses over the following several months, from which it selected the present 14 use cases for its CBDC pilot program.
Several use cases have been given to the participating firms in the e-AUD based on their areas of expertise.
For instance, Australia and New Zealand Banking Group Ltd (ANZ) will research offline payments. According to a project description provided by ANZ to the DFCRC, offline CBDC payments are made using smart cards that can be loaded with money.
A layer-2 network focusing on transferring, trading, and investing digital assets, Canvas Digital, will cover another intriguing use case, tokenized FX settlement. The project summary provided to DFCRC states that Canvas will make it easier to exchange e-AUD for foreign currency stablecoins.
This will make it possible to trade AUD for other currencies quickly and securely. According to Associate Governor Brad Jones of RBA, this process used to take days and may cost you up to 5% of the remittance amount.
The RBA announced a relationship with ConsenSys, a blockchain-based financial infrastructure business founded by Joseph Lubin, one of the co-founders of Ethereum, in 2020, which marked the start of Australia's CBDC aspirations. This alliance aimed to investigate a large-scale type of central bank digital money (CBDC).
Yet, Australia's CBDC initiative has increasingly shifted towards commercial and domestic use cases.
However, the e-AUD will function in a ring-fenced environment rather than being developed as a widely used alternative to fiat money. This is the reason it will only be applied in predetermined use situations. Such a strategy will keep the CBDC distinct from the nation's fiat currency, which might assist in safeguarding one from the other in the event of a breach.
In September 2022, the e-first AUD's whitepaper was published. This paper states that the CBDC, or at least the study results, are anticipated to be finished by the middle of 2023.
After releasing numerous other countries' CBDC pilot projects, the RBA made its statement shortly after. For instance, in the past several months, the experimental CBDC projects of Japan, Russia, Ukraine, and Laos have all been revealed.
According to data from the Atlantic Council, 11 nations have officially established their CBDCs so far, while 18 more are now in the prototype stage. Australia joining the bandwagon is another sign that the competition for CBDCs worldwide is heating up.
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