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The Reserve Bank of Australia (RBA) stated that Australia’s central bank digital currency (CBDC) is likely a few years away. The report highlighted that a CBDC could be seen as a complementary element rather than replacing private sector innovation.
CBDC Coin in Australia
The Reserve Bank of Australia announced on Wednesday that it will not make any decision on a central bank digital currency (CBDC) for several years due to unresolved issues arising from the pilot project.
Given the unresolved issues, it is likely that a decision on a CBDC in Australia is a few years away. The report warned that a comprehensive evaluation of the costs, benefits, risks, and other consequences of implementing a CBDC has not been undertaken. Instead, the focus has been on exploring how a CBDC can be used by the industry to enhance payment system operations.
The Reserve Bank of Australia (RBA) and the Digital Finance Cooperative Research Centre (DFCRC) initiated the research project last year. The DFCRC is a program worth 180 million Australian dollars ($124.3 million USD), financed by industry partners, universities, and the Australian Government. It was established to explore the digitalization of assets and potential use cases for CBDCs.
Mission of CBDC in Australia
The report stated that a CBDC could be seen as a complementary element to private sector innovation rather than replacing it. Findings revealed that an Australian CBDC could support offline electronic payments and enable “smarter” and more economically viable and less risky complex transactions.
Other findings demonstrated the various benefits of tokenization of assets on DLT platforms. The report also highlighted the potential for CBDCs to support fully backed privately issued stable coins. However, the report emphasized the need for further research due to a range of legal, regulatory, technical, and operational challenges.
The report mentioned that cryptographic keys are required to transact on a pilot CBDC platform, but finding affordable and sufficiently secure solutions for key management poses a challenge for companies without the ability to operate on other DLT networks.
The research also revealed difficulties in integrating a CBDC platform with industry use case applications and its impact on potential distribution models.
Politicians and individuals worldwide have expressed concerns about the potential surveillance aspects of CBDCs, and the privacy question remains unanswered for Australia as well. The report stated that “design decisions required to effectively support various privacy and data sharing needs are challenging, and the technologies to implement these requirements in a single CBDC platform are complex and require further research.”
