The Reserve Bank of Australia has released a white paper that examines the rationale behind the development of a Central Bank Digital Currency (CBDC).
The white paper which was compiled in collaboration with the Digital Finance Cooperative Research Centre (DFCRC) is titled ‘Australian CBDC Pilot for Digital Finance Innovation.
This document extensively explains the approach needed to be taken in developing the CBDC.
“The purpose of the CBDC pilot project outlined in this paper is to explore innovative use cases and business models that could be supported by the issuance of a CBDC.
“The project will also be an opportunity to further understanding of some of the technological, legal, and regulatory considerations associated with a CBDC.
“The project intends to test a general-purpose pilot CBDC issued as a liability of the RBA for use in real-world, pilot implementations of services offered by Australian industry participants.Any compelling use case – whether so-called ‘wholesale’ or ‘retail’ -will be explored in the project.
“All use case proposals submitted by industry participants will be used to inform assessments of the rationale for an Australian CBDC. A limited number of these use cases will also be selected for operation within the CBDC pilot project infrastructure.
“The design of the project is intended to be minimally prescriptive – both in the kind of CBDC model assumed, and in the kind of use cases explored. The project is seeking to facilitate ideation and innovation in use cases, and in turn,use those results to better understand the case for introducing a CBDC in Australia.” the white paper said.
According to the timeline of the paper, the project which commenced in July 2022 is expected to be completed around the middle of 2023.
Some of the areas being considered include the understanding of the regulatory aspect, technological, as well as legal side of running a CBDC.
The Reserve Bank of Australia is also seeking to collaborate with industry players in identifying the benefits of the CBDC in the country.