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  • Writer's pictureT Skevington and M Bacina

RBA ruminates on wholesale CBDC in powerhouse partnership

Updated: May 3

After surreptitiously admitting that it was experimenting with a wholesale Central Bank Digital Currency (CBDC) on a private Ethereum network in submissions to the Senate Select Committee on Fintech and Regtech back in February, the Reserve Bank of Australia (RBA) has announced a fully fledged wholesale CBDC research project to move beyond a proof of concept project.

Of course, it's dangerous to go alone, so the RBA will be conducting the research project in partnership with the Commonwealth Bank of Australia, National Australia Bank, Perpetual and ConsenSys. In a description of the project, the RBA confirmed that:

the project will involve the development of a proof-of-concept (POC) for the issuance of a tokenised form of CBDC that can be used by wholesale market participants for the funding, settlement and repayment of a tokenised syndicated loan on an Ethereum-based DLT platform

The key aim of the project appears to be considering in detail the implications of "‘atomic’ delivery-versus-payment settlement", with an exploration of the other benefits of programmable money as a secondary consideration.

In a media release confirming the project, Assistant Governor (Financial System) Michele Bullock said:

With this project we are aiming to explore the implications of a CBDC for efficiency, risk management and innovation in wholesale financial market transactions. While the case for the use of a CBDC in these markets remains an open question, we are pleased to be collaborating with industry partners to explore if there is a future role for a wholesale CBDC in the Australian payments system.

Claudio Lisco, Director of Strategic Initiatives & Solutions (Australia & South-East Asia) at ConsenSys also commented, saying on LinkedIn:

This is our third CBDC project currently underway in the APAC region in addition to the ones with the HKMA and the Bank of Thailand announced in the previous weeks. We believe that the interoperation of CBDCs and digital assets will be a fundamental building block of the next generation of financial market infrastructure built on #blockchain.

The current timeline for the project provides for completion by the end of 2020, and the publication of a report on the project and its main findings in the first half of 2021. Given the increasing movements towards retail ready CBDCs by other central banks (notably China and the Bahamas, the EU, Canada, the USA and the UK) the RBA's move to at least get a proof of concept approved for wholesale settlement is excellent news.


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