Central Bank Digital Currencies (CBDCs) have been gaining traction globally, with central banks exploring the potential of issuing their own digital currencies.
The Reserve Bank of Australia (RBA) is the latest central bank to jump on the CBDC bandwagon, with plans to launch a “live pilot” of its CBDC.
A CBDC is a digital currency that is issued and backed by a central bank, designed to function as a digital equivalent of physical cash.
CBDCs are seen as a potential solution to the challenges posed by traditional payment systems, such as slow transaction times and high transaction fees.
The RBA’s decision to launch a CBDC pilot is in response to the growing interest in digital currencies and the need for a more efficient payment system.
The bank collaborated with the Digital Finance Cooperative Research Centre (DFCRC) on a research project to explore CBDC’s utility and economic benefits.
The CBDC research project received submissions from various participants, and selected industry participants will demonstrate potential use cases for a CBDC using a limited-scale pilot CBDC that is a real digital claim on the Reserve Bank.
The RBA’s partners for the pilot projects include the Australia and New Zealand Banking Group Limited (ANZ), Mastercard, Monoova, the Australian Bond Exchange, DigiCash, Commonwealth Bank, and others. The proposed utility of the CBDC varies from offline payments to “trusted Web3 commerce” and several more.
Two key representatives of the RBA shared their narratives around the critical development, highlighting the potential of CBDCs to transform the payments landscape and improve financial inclusion.