The Reserve Bank of Australia is collaborating with the Digital Finance Cooperative Research Centre (DFCRC) on a research project to explore use cases for a central bank digital currency (CBDC).

The DFCRC is a 10-year, AUD$180 million research program funded by industry partners, universities and the Australian Government, through the Cooperative Research Centres Programme.

The project with the DFCRC will focus on innovative use cases and business models that could be supported by the issuance of a CBDC.

It will also be an opportunity to further understand of some of the technological, legal and regulatory considerations associated with a CBDC.

The project, which is expected to take about a year to complete, will involve the development of a limited-scale CBDC pilot that will operate in a ring-fenced environment for a period of time. It is intended to involve a pilot CBDC that is a real claim on the Reserve Bank.

Interested industry participants will be invited to develop specific use cases that demonstrate how a CBDC could be used to provide innovative and value-added payment and settlement services to households and businesses.

The central bank and the DFCRC will select a range of different use cases to participate in the pilot, based on their potential to provide insights into the possible benefits of a CBDC.

A report on the findings from the project, including an assessment of the various use cases developed, will be published at the conclusion.

The findings will contribute to ongoing research into the desirability and feasibility of a CBDC in Australia.

The Australian Treasury is participating as a member of the steering committee for the project, as part of its joint work with the Reserve Bank on exploring the viability of a CBDC in Australia.

A paper will be published in the next few months that will explain the objectives and approach of the project in more detail and how industry participants will be able to engage in this.

Michele Bullock, Deputy Governor of the Reserve Bank said,

‘This project is an important next step in our research on CBDC.

 

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,’

Dr Andreas Furche, CEO of the DFCRC said,

‘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.’

Featured image edited based on photo by Patrick McLachlan via Pexels