The Reserve Bank of Australia is collaborating with Commonwealth Bank, National Australia Bank, Perpetual and ConsenSys Software on a project to explore the potential use and implications of a wholesale form of central bank digital currency (CBDC) using distributed ledger technology (DLT).
The project will involve the development of a proof-of-concept (POC) for the issuance of a tokenised form of CBDC that can be used by wholesale market participants for the funding, settlement and repayment of a tokenised syndicated loan on an Ethereum-based DLT platform.
Assistant governor Michele Bullock says: "With this project we are aiming to explore the implications of a CBDC for efficiency, risk management and innovation in wholesale financial market transactions."
Earlier this month, the RBA's head of payments policy Tony Richards said that the public case for issuing a general purpose or retail CBDC in Australia is still to be made, but reserved judgement on applications built for bank-to-bank transactions
CBA’s group executive for Institutional Banking & Markets, Andrew Hinchliff expresses a belief that distributed ledger technology will have a "far-reaching impact" for financial services.
“CBA has already seen it successfully applied many times, in instances such as stable coins, supply chain and capital markets solutions, bank guarantees, programmable money and digital assets," he says. "CBA's x15ventures is pleased to be part of this collaborative opportunity to advance our shared understanding of a central bank digital currency as a settlement mechanism for digital assets in an Australian context.”
The project is expected to be completed around the end of 2020 and the parties intend to publish a report on the main findings during the first half of 2021.