Australia will not be making any decision on a central bank digital currency (CBDC) for some years due to several unresolved issues that surfaced at the end of the pilot project, the country’s central bank announced on Wednesday.
“Given the many issues that are yet to be resolved, any decision on a CBDC in Australia is likely to be some years away,” the report said with the caveat that the project did not set out to provide a complete assessment of the costs, benefits, risks and other implications of introducing a CBDC. “Instead, it was more narrowly focused on exploring how a CBDC could be used by industry to enhance the functioning of the payments system.”
The Reserve Bank of Australia (RBA) and Digital Finance Cooperative Research Centre (DFCRC) started the research project last year. The DFCRC is a 180 million Australian dollar (US$124.3 million) program funded by industry partners, universities and the Australian Government. It was set up to research the opportunities arising from asset digitization and CBDC use cases.
The report said that in a way a “CBDC could be viewed as an enabling complement to, rather than substitute for, private sector innovation.”
The findings revealed that an Australian CBDC could support offline electronic payments and “enable ‘smarter’ payments” or complex transactions which would be more economical and less risky. Other findings showed that the tokenization of assets on DLT platforms had several benefits. The report also said that there was potential for privately issued stablecoins that were fully backed by CBDC.
However, the report focused on the need for further research due to a range of legal, regulatory, technical and operational issues.
Cryptographic keys were required to perform actions on the pilot CBDC platform but finding affordable and adequately secure solutions for key management was a challenge for companies that did not have capability operating on other DLT networks, the report said.
The research also found that integrating a CBDC platform with industry use case applications was challenging and this has implications for potential deployment models.
Lawmakers and individuals across the world have been concerned about the potential surveillance aspects of CBDCs and the privacy question remained unanswered for Australia too.
“The design decisions required to effectively support the variety of needs for privacy and data sharing are challenging, and the technologies to implement those requirements on a single CBDC platform are also complex, warranting further research,” the report said.
