A collaborative undertaking by the Reserve Bank of Australia (RBA) and the Digital Finance Cooperative Research Centre (DFCRC) found a central digital currency is “likely to be some years away”.
However, the joint report did find [pdf] “a number of avenues for future research” for central bank digital currencies' (CBDC) usage where “tokenised money could add value”.
The report found “key themes” from use case investigations conducted to date covered enabling "smarter" payments, asset market innovation, promotion of private digital money and alternative payment methods.
The RBA and DFCRC held a pilot project to explore the use cases of CBDCs in the Australian payments landscape.
The year-long research project received hundreds of use case submissions at the end of last October with a number of use cases selected for participation in the pilot, including CBA and ANZ.
The technology, when grouped with other digital finance innovations, could enable upgrades to the payments system, however, there was still a multitude of obstacles in the way, the two concluded.
“The various use cases explored in the project highlighted a range of areas where tokenised money could add value, including by facilitating programmable payments, atomic settlement in tokenised asset markets and offline payments,” the report stated.
“The project also highlighted opportunities for CBDCs to support the development of new forms of privately-issued digital money (including tokenised bank deposits or CBDC-backed stablecoins) which could address some of the business needs identified in the use case submissions.
“In this sense, a CBDC could be viewed as an enabling complement to, rather than substitute for, private sector innovation.”
Findings were also that “a number of legal, regulatory, technical, and operational issues associated with CBDCs ... warrant further analysis”.
“Key non-functional requirements for a CBDC that were not a focus of the project – such as performance, scalability, and security – could also be considered in future research," it stated.
“More broadly, this project has demonstrated the value in close engagement between industry and policymakers to better understand the opportunities and challenges associated with innovations in digital money.”
The report stated that “given the many issues that are yet to be resolved, any decision on a CBDC in Australia is likely to be some years away.”
Next steps
The RBA’s assistant governor for the financial system Brad Jones said the findings “will help to shape the next phase of the RBA’s research program 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,” added Jones.
DFCRC chief executive Dr Andreas Furche said the “strong” industry interest speaks to “the importance of collaboration between central banks … and industry experts driving its potential use cases”.
