The RBA is set to explore various use cases for its central bank-issued digital currency (CBDC).
The Reserve Bank of Australia (RBA) has confirmed that it is teaming up with payments company Mastercard as the testing phase of its CBDC, digital dollar – the eAUD, gets underway.
According to the RBA, it is set to explore various use cases for its central bank-issued digital currency (CBDC), which will include offline payments, securities trading, and bond settlement among others. To do this, the RBA is launching a series of pilot projects.
In a statement issued Thursday morning local time, RBA Assistant Governor Brad Jones claims that the pilot projects will involve a good number of industry participants. They will range from small fintech startups to giant financial institutions, says Jones.
Some of RBA’s partners for the pilot projects include Mastercard, the Australian Bond Exchange, New Zealand Banking Group Limited (ANZ), Monoova, Commonwealth Bank, DigiCash, and others.
With Mastercard, for example, the RBA hopes to tackle the issue of conducting offline transactions using a CBDC. In line with this, a project description suggests that preloading smart cards with funds could enable offline payments.
Meanwhile, there is another project that will test the possibility of having round-the-clock international remittances. This project will explore using the dollar-pegged USDC stablecoin to streamline foreign exchange trades and remittances and reduce counterparty risk.
Australia Seeks to Tap the Full Potential of Its CBDC
Speaking further, Jones highlighted the focal point of the pilots and broader research study that Australia is embarking on. According to his statement, Australia stands to gain at least two benefits from it.
Firstly, it will encourage hands-on learning by the entire industry. It will also help policymakers to better understand the benefits of a CBDC to the Australian financial system and economy.
It should be noted that the RBA’s digital dollar experiment is one of many such initiatives around the world. Central banks are intensifying their efforts to transition to a more digital economy. And even more, they want safer and close options to private cryptocurrencies, that still leverage similar underlying technologies.
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