The Reserve Bank of Australia (RBA) and Digital Finance CRC (DFCRC) have opened their call for use cases that will be considered for the central bank digital currency (CBDC) pilot. The deadline is the end of October. The pilot aims to explore potential new business models that a CBDC can enable, including tokenization, with the ultimate intention of assessing the economic impact of a CBDC. Technology research is not the goal.
The eAUD platform uses a permissioned version of Ethereum, Quorum, developed by Digital Finance CRC and operated by the central bank. However, the use cases which will interface with the eAUD platform can leverage blockchains, public or private, or conventional technologies. All eAUD users will have to go through know your customer (KYC) compliance.
Use cases have to be legally compliant and participants are expected to consult the regulator ASIC. It was mentioned that some legal exemptions may be allowed purely for the pilot.
The aim is to keep the exploration flexible, so participants are expected to include financial institutions, fintechs, public sector agencies, and technology providers. Only domestic use cases are being explored.
We previously asked the DFCRC whether this was a purely wholesale CBDC experiment, and they said it is both wholesale and retail.
While the RBA and DFCRC are open minded, they provided examples of the sorts of applications they anticipate. These include:
- Atomic settlement of transactions involving tokenized assets
- Multi-party or syndicated transactions
- Escrowed transactions
- Enabling conditional or programmable transactions
- As a verifiable reserve asset to reduce counterparty risks
- 24×7 operations.
Once the applications are received, some use cases will be tested in November, with a subset selected in December. These will go forward to the pilot, which will run for the first four months of 2023. A white paper with additional details has been published.
The project with the DFCRC was unveiled in early August, but subsequently, the Reserve Bank of Australia indicated that if a decision is made to proceed with a CBDC, then a production version is more likely to be a wholesale CBDC. The central bank has previously conducted Project Atom, a wholesale CBDC initiative and is a participant in Project Dunbar, a multi-CBDC project for cross border payments.