During today’s payment systems board meeting, the Reserve Bank of Australia discussed central bank digital currency (CBDC).
The synopsis states, “While most central banks are still investigating the potential merits, design and implications of CBDC, many see an increased likelihood of issuing some form of CBDC in the future, especially to support wholesale transactions.”
Wholesale transactions could include cross-border payments and settling securities transactions, particularly as settlement times shorten from the two-day timeframe that is common in many jurisdictions. Like the ASX, many regions are exploring using blockchain or DLT for securities post-trade, and it’s desirable to have a CBDC.
The central bank has conducted a wholesale proof of concept during which it allowed access to non-banks. Earlier this month, it announced a year-long limited-scale pilot in association with the Digital Finance Cooperative Research Centre (DFCRC). The aim is to explore the economic benefits and how to maximize them.
However, the DFCRC confirmed to Ledger Insights that those pilots would be both wholesale and retail.
The Reserve Bank’s perception of other central banks leaning towards wholesale CBDC could be influenced by the Multi-CBDC project that it’s engaged with, Project Dunbar. The collaboration is exploring the use of wholesale CBDCs for cross border payments. The Monetary Authority of Singapore initiated the project (MAS), which also includes the central banks of Malaysia and South Africa. The Philippines is considering joining as well.