Australian CBDC proof-of-concept confirmed by RBA
In a recent meeting on 21 August 2020, the members of the Payments System Board confirmed that the RBA is developing a proof-of-concept for Central Bank Digital Currencies (CBDCs) in Australia with external parties.
The proof-of-concept will explore aspects of wholesale CBDC on a private Ethereum network which was previously mentioned in the RBA's submissions to the Senate Select Committee on FinTech and RegTech.
Notwithstanding the experiments, the Payments System Board which includes representatives of the RBA, APRA and the Treasury, did not consider there was a strong public-policy case for a retail Central Bank Digital Currencies (CBDCs) in Australia at the moment. The New Payments Platform in Australia currently provides near instantaneous payment capabilities, removing one of the longstanding complaints about traditional digitized currency. The RBA has confirmed it is monitoring international CBDC developments and conducting further research. There is plenty to monitor overseas with China's digital yuan about to launch and many other countries actively moving to be ready for this shift to truly digital cash.
The RBA has noted:
The [RBA] is continuing to research the technological and policy implications of a wholesale form of CBDC and is working to develop a proof-of-concept with external parties to explore aspects of wholesale CBDC, building on research the Bank did in its Innovation Lab last year.
The RBA's position was also confirmed by Senator Andrew Bragg (who Chairs the Senate Inquiry into FinTech and RegTech) at a cybersecurity webinar last month reiterating that the RBA is actively researching CBDC developments internationally but had no plans to proceed with developing or issuing a retail Australian digital currency right now.
We will continue to watch this and advocate for Australia to take better lead in harnessing the power of digital currencies via a CBDC.