Reserve Bank of Australia printed on a granite wall

Australia may opt for wholesale digital currency, central bank says

Australia is one of the countries considering a central bank digital currency (CBDC), although it might eventually adopt a wholesale CBDC. A CBDC is most countries’ attempt at bringing blockchain and digital assets to mirror their native currency. Several countries are exploring the benefits of the concept, while some, like Nigeria, have already launched one. 

While some countries are providing fluidity in whether their CBDC will take a retail or wholesale approach, the Reserve Bank of Australia (RBA) noted that the country’s CBDC would most likely be limited to wholesale transactions. The central bank iterated the planned adoption in a Payments System Board meeting on Thursday, as mentioned in a press release.

In the meeting, the Payments System Board members highlighted the growing interest in CBDCs in Australia and other countries. The Reserve Bank of Australia had earlier launched research into the possibility of adopting a CBDC. The Board members talked about the central bank’s progress in the study on a viable CBDC approach. They also noted the necessity of sticking with a wholesale CBDC approach.

The country could set up the CBDC for use in wholesale international payments, as well as transactions involving securities.

“While most central banks are still investigating the potential merits, design, and implications of CBDC, many see an increased likelihood of issuing some form of CBDC in the future, especially to support wholesale transactions,” according to the press release.

Australia is making progress on its CBDC research

The RBA had made significant progress on its CBDC research, which involved a recent joint one-year project with the Digital Finance Cooperative Research Centre (DFCRC). The project’s aim, announced two weeks back, is to assess possible use cases for the CBDC.

To make this possible, the central bank and the DFCRC would invite notable participants in the industry and mandate them to present developments that highlight potential use cases of CBDC. 

Like several other countries, Australia has shown extensive interest in developing a CBDC. The United Kingdom, Russia, and a host of others are also exploring the best approach to developing CBDCs. On the other hand, Nigeria has already launched its e-Naira, making it the first African country to reach that level. The country is also looking to boost the adoption of the e-Naira.

Australia’s recent update on its CBDC research is part of the government’s recent efforts at fostering blockchain innovation. Furthermore, as individuals and institutions show keen interest in digital assets, the government has noticed the necessity of proper oversight. Last month, the Australian Competition and Consumer Commission (ACCC) and Australian Securities & Investments Commission (ASIC), two of Australia’s regulatory bodies, formed a partnership to combat scams within the digital asset space.

To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.

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