Australia’s central bank has unveiled plans to examine the potential economic benefits of introducing a central bank digital currency (CBDC).
The Reserve Bank of Australia (RBA) said in a statement on Tuesday it would carry out a year-long pilot project to explore “innovative use cases and business models” for a CBDC and gain a better understanding of technological, legal and regulatory considerations.
The RBA will partner with the Digital Finance Cooperative Research Centre (DFCRC), a government-backed industry group, for the project, which will invite industry players to develop “specific use cases” that demonstrate how a CBDC could provide innovative payment and settlement services to households and businesses.
The result of the pilot will inform ongoing research into the desirability and feasibility of a CBDC in Australia, the RBA said.
“This project is an important next step in our research on CBDC,” RBA Deputy Governor Michele Bullock said in a statement. “ We are looking forward to engaging with a wide range of industry participants to better understand the potential benefits a CBDC could bring to Australia.”
About 100 countries are considering rolling out CBDCs, according to the International Monetary Fund, with a number of jurisdictions including China and the Bahamas already distributing their digital currencies among the public.
CBDC proponents say the nascent technology will allow for faster and cheaper transactions, promote financial inclusion, and give central banks greater flexibility in monetary policy.
While sharing some similarities with cryptocurrencies, CBDCs differ from digital tokens like Bitcoin as they are controlled by a central authority.
Cryptocurrencies operate on peer-to-peer networks known as blockchains, which are decentralised so that no single person or group exerts control.
