The Australian central bank has stated that it will investigate any potential economic gains from introducing a central bank digital currency (CBDC).
In a statement released on Tuesday, the Reserve Bank of Australia (RBA) announced that it would conduct a year-long pilot project to investigate “new use cases and business models” for a CBDC and better understand the relevant technological, legal, and regulatory factors.
The RBA will collaborate with the government-backed industry group Digital Finance Cooperative Research Centre (DFCRC) on the project, which will ask business leaders to create “specific use cases” that illustrate how a CBDC might offer cutting-edge payment and settlement services to consumers and companies.
The RBA said that they have already done research regarding the use cases of CBDC,
“Considerable research has been undertaken by central banks, including the Reserve Bank, into the feasibility and possible technical design of CBDC, in particular exploring the potential use of new technologies such as distributed ledger technology.”
The RBA stated that the pilot’s findings would contribute to an ongoing study on the viability and attractiveness of a CBDC in Australia.
RBA Deputy Governor Michele Bullock stated, "this initiative is a crucial next step in our research on CBDC. To better appreciate the potential advantages a CBDC could offer Australia, we look forward to interacting with a wide spectrum of sector participants.”
“CBDC is no longer a question of technological feasibility. The key research questions now are what economic benefits a CBDC could enable, and how it could be designed to maximise those benefits,” as per the CEO of DFCRC, Dr. Andreas Furche.
Many Countries Exploring Opportunities in CBDCs
The International Monetary Fund estimates that almost 100 nations are considering implementing CBDCs, with some countries, like China and the Bahamas, releasing their digital currencies to the general population.
Advocates of CBDC claim that the emerging technology will facilitate quicker and less expensive transactions, advance financial inclusion, and provide central banks more monetary policy flexibility.
CBDCs are different from digital tokens like Bitcoin since they are governed by a central organization, although having some similarities with cryptocurrencies.
Blockchains are peer-to-peer networks used by cryptocurrencies, and are decentralized so that no one entity or organization has authority over them.