Reserve Bank of Australia (RBA) Announces a CBDC Pilot Program Through Mid 2023
- The Australian government, through the RBA research program on CBDC, wants to know the benefits and risks of adopting the technology.
- According to the announcement, the Australian pilot CBDC program will be named the eAUD, and developed on the Ethereum network.
- Whereby the smallest denomination will be one cent of the Australian dollar.
This Digital Finance Cooperative Research Centre (DFCRC), in conjunction with the Reserve Bank of Australia (RBA), have teamed up to find out the use cases for a central bank digital currency (CBDC) in the country. The project is overseen by a Steering Committee comprising senior representatives of the RBA, DFCRC and the Australian Treasury. According to the announcement, the pilot program is expected to run mid-next year after the July kickoff.
Previously, the Reserve Bank of Australia did not see the need for a CBDC, but circumstances have shifted. Furthermore, demand from both institutional and retail investors has spiked in developed economies, including Australia.
“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,” the report noted.
The Australian government has scrutinised the digital asset market to adopt its technology safely. Furthermore, developed countries, including China, have launched a CBDC.
Australia on CBDC and Digital Assets
The cryptocurrency market grew slightly over $3 trillion last year. However, the figures have declined to around $1 trillion in the past few weeks. The crypto winter that has sustained a few months has seen institutional investors and global governments shift their focus on digital assets.
While other industries struggled during the coronavirus crisis, the cryptocurrency industry flexed its muscles by hitting its all-time high. As such, the Australian government is keen to adopt blockchain and cryptocurrency technology to open up its economy further.
Nevertheless, the Australian government, through the RBA research program on CBDC, wants to know the benefits and risks of adopting the technology.
“The DFCRC will implement the pilot CBDC platform, with the RBA responsible for issuance and redemption of the pilot CBDC and other oversight and regulatory functions. This will be a stand-alone platform solely for the issuance and transactional operation of the pilot CBDC,” the report added.
According to the announcement, the Australian pilot CBDC program will be named the eAUD. Whereby the smallest denomination will be one cent of the Australian dollar.
Since the pilot program is entitled to Australian citizens, the report noted that eligible eAUD would have to pass a KYC verification. Otherwise, the RBA has announced that no interest will be paid to eAUD holders during the pilot program.
The Australian CBDC pilot program is expected to run on the second most valuable blockchain network, Ethererum. Furthermore, the Ethererum network offers a comprehensive and secure intelligent contract ecosystem with a vast ecosystem.
The Australian government calls upon local business entities to register with the CBDC pilot program. Moreover, the RBA has not set the maximum output for the eAUD during the pilot program period.