Local FinTechs and two of the Big Four banks have been invited by the Reserve Bank to demonstrate the potential of Central Bank Digital Currency in Australia.
Each of the 14 pilots will involve Central Bank Digital Currencies (CBDC) that have a real claim on the Reserve Bank of Australia (RBA). CBDCs are a digital form of money, equivalent to Australian dollars.
Some of the pilots include a tokenised foreign exchange settlement system, offline payments, enabling ecommerce across multiple blockchains, automating the collection of goods and services taxes, and tokenising invoices and payments.
The Australian FinTechs leading use case tests are Unizon, NotCentralised, Monoova, Imperium Markets, Fame Capital, Canvas Digital, and digi.cash.
ANZ is leading four of the use case tests and the Commonwealth Bank leads one. Among the use cases, ANZ will be the sole distributor for CBDCs after purchasing them from the RBA.
Last March, ANZ was the first to make a payment using an Australian-bank issued Australian-dollar stablecoin through a public blockchain.
The pilot project, being jointly delivered by the RBA and the DFCRC, began in July 2022 and was followed by the release of a white paper in September. The use case pilots will commence on March 31, 2023.
The DFCRC’s program director for Australian CBDC Dilip Rao said “the variety of use cases proposed covers a range of problems that could potentially be addressed by CBDC”.
Mr Rao added that the process of validating these use cases will inform further research and design considerations for an Australian CBDC.
Overall, the RBA and its research project partner, the DFCRC, received 140 use case proposals from industry.
RBA Assistant Governor (Financial System) Dr Brad Jones said the central bank was pleased by the “enthusiastic engagement”.
“It has also been encouraging that the use case providers that have been invited to participate in the pilot span a wide range of entities in the Australian financial system, from smaller fintechs to large financial institutions,” he said.
“The pilot and broader research study that will be conducted in parallel will serve two ends – it will contribute to hands-on learning by industry, and it will add to policy makers’ understanding of how a CBDC could potentially benefit the Australian financial system and economy.”
Commonwealth Bank managing director of blockchain and digital assets Sophie Glider added that while the exact roles that blockchain and CBDC will play in the future is uncertain, it is “essential that Australia continues to build our capabilities in this key area of finance”.
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