The Reserve Bank of Australia will trial a digital currency in a “ring-fenced” pilot program as part of a year-long collaborative research project into how it could be used by consumers and businesses.
Australia’s central bank has previously declared its interest in digital currency, which could be a digital equivalent of the dollar and rival privately minted cryptocurrencies, but the research project announced by the bank on Tuesday with the Digital Finance Cooperative Research Centre would focus on how such an asset could actually be used.
The RBA is collaborating on a research project into the use of a central bank digital currency.Credit:Louie Douvis
The research centre’s chief executive Andreas Furche, whose organisation is a product of industry, university and government collaboration, said it had already been proven that a central bank digital currency was technically feasible. “The key research questions now are what economic benefits a CBDC (central bank digital currency) could enable, and how it could be designed to maximise those benefits,” Furche said.
In a media release, the Reserve Bank said previous research from central banks around the world had gone into questions such as how the distributed ledger technology that is a hallmark of cryptocurrencies could be used for an RBA-backed currency.
But Michele Bullock, the RBA’s deputy governor, said Tuesday’s project was the next step in its research. “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,” Bullock said.
The project would involve a “ring-fenced environment” in which a pilot digital currency would be used that had a real claim on the Reserve Bank. Participants selected by the bank and research centre will develop projects that demonstrate how the digital currency could be used to assist businesses and households within that framework. A report will be published at the end.
China has explored the use of a digital currency, with the use of the e-CNY being gradually expanded.Credit:AP
In June, the Bank for International Settlements (BIS), which facilitates cooperation between central banks, labelled Bitcoin and other cryptocurrencies as speculative assets of interest to organised criminals that were a huge waste of energy.
But the BIS said institutions such as the RBA should consider their down digital currencies.