The Reserve Bank of Australia (RBA) will develop a “limited-scale” pilot to explore use cases and potential economic benefits of a central bank digital currency (CBDC).
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Australia’s central bank plans to create a CBDC, which will operate in a ring-fenced environment. A ring-fence environment separates a portion of the user’s financial assets from the rest, potentially securing one from the other in case of a breach.
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The project will take about a year to complete, according to an announcement on Tuesday.
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In 2020, the RBA announced its intention to explore a potential CBDC with the development of a proof-of-concept (POC) for the issuance of a tokenized digital dollar for use by the wholesale market. Attention is now being turned to a potential CBDC for use by households and businesses.
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While the central banks of almost every developed economy are at least exploring rolling out a CBDC, the jury is somewhat out on the necessity or desire for one in places like Australia, which the RBA acknowledges.
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“A question that has received less attention to date, especially in countries like Australia that already have relatively modern and well-functioning payment and settlement systems, is the use cases for a CBDC and the potential economic benefits of introducing one,” the central bank said.
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With China’s “eCNY/” being fairly well established and having received mainstream extended trials at the Winter Olympic Games in February, central banks elsewhere want to make sure they are not being left behind in the digital currency race.
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The RBA will publish a paper in the next few months detailing its objectives for the projects and interested industry bodies will be able to participate.
Read more: BIS Calls for Global Collaboration With CBDC Designs
