Australia’s central bank is operating the next, more advanced phase of fine-tuning its e-money, called eAUD. The country, which had been working on the development of its central bank digital currency (CBDC) for some time, decided to launch eAUD in its pilot testing phase. The development was confirmed by the Reserve Bank of Australia (RBA) on Thursday March 2. CBDC eAUD will essentially represent the Australian dollar on the blockchain, making transactional details immutable and, in turn, more transparent.
The RBA has onboarded a group of fintech players to participate in the eAUD CBDC pilot project. These include MasterCardAustralian and New Zealand (ANZ) banking group, Commonwealth Bank as well as local crypto players like Monoova and DigiCash.
“The pilot and larger study that will be conducted in parallel will serve two purposes – it will contribute to hands-on learning by the industry, and it will add to policymakers’ understanding of how a CBDC could potentially benefit the system. Australian Finance and Economy,” Brad Jones, Deputy Governor (Financial System) at the RBA, said in a Prepared statement.
A CBDC is essentially a representation of a country’s fiat currency on the blockchain network. CBDC transactions, when deployed, will reduce central bank dependencies on physical currencies, saving a fortune on printing and handling cash.
While ANZ will test the use of Australian CBDCs in nature-based offline payments and asset trading, Mastercard will test the eAUD usage interoperability quotient.
GST automation, custody of funds and corporate obligation settlements are among other areas where the Australian CBDC’s uses will be verified during its pilot project.
The Australian Digital Finance Cooperative Research Center (DFCRC) is also working with the RBA on the CBDC initiative. DFCRC is a 10-year, $180 million (about Rs 1,500 crore) research program funded by industry partners and universities alongside the Australian government.
“The variety of proposed use cases cover a range of problems that could potentially be solved by the CBDC, including some that involve using the CBDC for the atomic settlement of transactions in tokenized assets. The use case validation process with industry participants and regulators will inform further research into CBDC design considerations that could potentially play a role in a token economy,” said Dilip Rao, program director – CBDC with the DFCRC, as part of the preparation. statement.
In September last year, the RBA issued a white paper which claimed that the eAUD pilot could be completed by mid-2023.
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