A year-long research project by the Reserve Bank of Australia has uncovered a number of legal, regulatory, technical and operational issues that could stymie the introduction of a central bank digital currency (CBDC)
Operating in a ring-fenced environment and involving a digital currency that is a real claim on the Reserve Bank, 14 pilot projects with a range of industry participants investigated potential CBDC use cases.
The various use cases explored in the project highlighted a range of areas where tokenised money could add value, reports the RBA, including by facilitating programmable payments, atomic settlement in tokenised asset markets and offline payments. The project also highlighted opportunities for CBDC to support the development of new forms of privately-issued digital money, including tokenised bank deposits or CBDC-backed stablecoins.
"In this sense, a CBDC could be viewed as an enabling complement to, rather than substitute for, private sector innovation," notes the central bank.
However, the project highlighted the need for further analysis of the legal underpinnings for a CBDC, as well as consideration of the regulatory frameworks that could apply to any new business models that may arise. The pilots also highlighted challenges in integrating a CBDC platform with industry use case applications, which has implications for potential deployment models.
"Given the many issues that are yet to be resolved, any decision on a CBDC in Australia is likely to be some years away," the report states.
Brad Jones, RBA assistant governor, comments: "The key findings from the project will help to shape the next phase of the RBA’s research programme into the future of money in Australia. Alongside our ongoing work on cross border payments, this will include deepening our understanding of the role that tokenised asset markets and programmable payments could have in the Australian economy."