The Reserve Bank of Australia is launching a new project to explore whether a digital version of the Australian dollar, issued by the central bank, can help to create digital asset markets for commodities, fixed income products or carbon credits.
The pilot will go beyond theoretics and involve developing a CBDC which will be a real claim on the Reserve Bank, to allow industry and researchers to work out whether specific applications for CBDC could create innovative payment and settlement services to both households and businesses. The RBA is interested in CBDC allowing for ‘atomic’ settlement, which involves the exchange of an asset and payment to occur simultaneously, eliminating settlement risk.
Global central banks are exploring CBDC for a range of reasons, from lifting financial inclusion to creating real-time payments, but these are not as big an issue in Australia. However, creating digital versions of mining and minerals assets to open liquidity in markets, or improving versions of carbon credits in developing ESG markets, could be enhanced by CBDC.
The RBA, in its release on the project, has dispensed with the classification of CBDC trials involving ‘wholesale’ or ‘retail’ markets and is keen to explore both. The latest thinking comes after the The RBA is keen to see wide participation in the pilot, beyond banks and members of the DRCRC. “We are looking forward to engaging with a wide range of industry participants to better understand the potential benefits a CBDC could bring to Australia,” said Michele Bullock, deputy governor of the Reserve Bank.