Australia’s central bank the Reserve Bank of Australia (RBA) is initiating a project for exploring the potential use of a wholesale central bank digital currency (CBDC). The bank has announced on November 2, 2020, that it is making partnerships with the blockchain technology company ConsenSys Software, the financial services firm Perpetual, and the country’s two largest banks National Australia Bank and Commonwealth Bank.
The Reserve Bank of Australia has picked up the Ethereum blockchain for launching the wholesale central bank digital currency. RBA will utilize the distributed ledger technology (DLT) for exploring implications as well as the potential use of a wholesale CBDC.
RBI is currently focused on issuing a tokenized form of a central bank digital currency and for this purpose, it will be developing a Proof-of-Concept (POC). This will allow the participants of the wholesale market to use the central bank digital currency in its tokenized form for settlement and funding as well as for the “repayment of a tokenized syndicated loan on an Ethereum-based DLT platform”.
The central bank aims to finish this collaborative project by the end of the present year. As soon as the project is completed, the main findings and a report on this project will be published within the time frame of the first half of the year 2021.
This project will aim at exploring the implications of a central bank digital currency, said Michele Bullock, the Assistant Governor of the Reserve Bank of Australia. Bullock said that they are delighted to be working and collaborating with their partners. Bullock stated:
“With this project we are aiming to explore the implications of a CBDC for efficiency, risk management and innovation in wholesale financial market transactions. While 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.”
RBI has now also included in the list of those central banks who are currently working on exploring the implications and the potential usage of a central bank digital currency.