RBA, CBA, NAB, Perpetual and ConsenSys Software explore CBDC

By Edil Corneille

Today, the Reserve Bank of Australia (RBA) announced that it is partnering with Commonwealth Bank of Australia (CBA), National Australia Bank (NAB), Perpetual and ConsenSys Software, a blockchain technology company, on a collaborative project to explore the potential use and implications of a wholesale form of central bank digital currency (CBDC) using distributed ledger technology (DLT). This is part of the ongoing research at the Reserve Bank on wholesale CBDC.

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 POC will be used to explore the implications of ‘atomic’ delivery-versus-payment settlement on a DLT platform as well as other potential programmability and automation features of tokenised CBDC and financial assets.

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.”

The project is expected to be completed around the end of 2020 and the parties intend to publish a report on the project and its main findings during the first half of 2021.

Recently in late October, Cambodia announced the launch of its CBDC which has been co-developed with SORAMITSU, a Japanese/ Swiss FinTech company. The National Bank of Cambodia (NBC) began its Central Bank Digital Currency (CBDC) work in 2016 with the inauguration of Project Bakong. The project’s aim was to explore the capacity of digital payment systems to mitigate the burden for banks, to encourage the use of the Riel, and to enhance financial inclusion among underserved citizens.