After completing its CBDC pilot programme, the Reserve Bank of Australia identified four main areas where central bank-issued digital currency could make a difference.
The Reserve Bank of Australia has concluded a pilot programme to test the feasibility of a central bank digital currency, finding it useful in four primary areas, including the facilitation of complex payments and the tokenization of assets.
On August 23, the Reserve Bank of Australia and the Digital Finance Cooperative Research Centre released a 44-page paper detailing their results and the many use cases where a CBDC wasn’t necessary.
The pilot programme showed that a CBDC may be useful in four main areas, including the facilitation of “smarter” payments, where a tokenized CBDC made possible a variety of complicated payment arrangements that were previously unattainable with preexisting payment systems.
The research went on to state that a CBDC may boost resilience and inclusiveness in the broader digital economy, as well as assist financial innovation in areas like debt securities markets.
The many proposals presented by the 16 companies involved in the pilot programme all pointed to the potential advantages of a CBDC in facilitating “atomic settlements” — the simultaneous and rapid settlement of transactions.
CBDCs were also cited for their programmability, which was said to “improve efficiency and reduce risk in a range of complex business processes.”
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Participants in the CBDC pilot programme were left in the dark about its legal status and regulatory treatment because it was designed as a real legal claim on the RBA rather than a proof-of-concept.
It was not clear to all participants whether “holding or dealing in the pilot CBDC” constituted “providing custody services” or “dealing in a regulated financial product,” as the report put it. To put it another way, “these issues would ideally be anticipated and resolved in any legal and regulatory reforms that accompany the issuance of a CBDC.”
Although the paper highlighted scenarios in which a CBDC could prove valuable, it did so while acknowledging that many of the same advantages could be realised through alternative mechanisms, such as privately issued tokenized bank deposits or asset-backed stablecoins.
However, “it was not entirely clear that CBDC was exclusively required to achieve the desired economic outcomes.”
As a whole, the paper concluded that further study is needed to properly flesh out the potential benefits of introducing a CBDC into the Australian payments environment.