A collaborative research project into the use of distributed ledger technology in CBDC loan syndication conducted by the Reserve Bank of Australia in association with Commonwealth Bank, National Australia Bank, Perpetual and ConsenSys Software has demonstrated the potential for significant efficiency gains for businerss customers and market participants.
Launched in November 2020, Project Atom involved the development of a proof-of-concept (POC) for the issuance of a tokenised form of CBDC that can be used by wholesale market participants for the funding, settlement and repayment of a tokenised syndicated loan on an Ethereum-based DLT platform.
The Australian central bank says the POC demonstrated that the digitisation of syndicated loans on a DLT platform could provide efficiency gains and reduce operational risk by replacing highly manual and paper-based processes.
Assistant governor Michele Bullock says: "Project Atom demonstrated the potential for a wholesale CBDC and asset tokenisation to improve efficiency, risk management and innovation in wholesale financial market transactions. The project also demonstrated the benefits of collaboration in advancing our knowledge in this area. The Bank will continue its research on CBDCs as part of its strategic focus area on supporting the evolution of payments."
Integrating a wholesale CBDC on the same DLT platform enabled ‘atomic’ delivery-versus-payment settlement of the drawdown, novation and repayment of the tokenised syndicated loan, Bullock says.
The POC also demonstrated that an enterprise-grade DLT platform with appropriate controls on access and security could address many of the potential requirements for a wholesale CBDC system and tokenised assets platform.
NAB group executive, corporate & institutional banking, David Gall comments: “The project involved the development of a proof-of-concept into the practical application of blockchain technology and asset tokenisation that is helping us shape the future of finance.
“The results showed these technologies made loan syndication for our larger business customers easier and faster and removed friction points. We also saw efficiency gains and reduced operational risk by replacing highly manual and paper-based processes."
Earlier this month, the RBA's head of payments policy Tony Richards re-iterated his view that the public case for issuing a general purpose or retail CBDC in Australia is still to be made, but reserved judgement on applications built for bank-to-bank transactions