The CBDC’s use cases varied from offline payments to “trusted Web3 commerce,” and financial industry members were asked to participate in a live experiment. According to a joint statement from the Reserve Bank of Australia and the Digital Finance Cooperation Cooperation Center, an Australian economic research organization, Australia’s central bank plans to launch a “live trial” of a central bank digital currency “in the coming months,”.
In a study initiative to “examine possible use cases and economic advantages of a central bank digital currency (CBDC) in Australia,” the RBA and DFCRC announced their collaboration on March 2.
The RBA stated that the initial phase of the study effort entails the choice of many financial industry members to illustrate prospective CBDC use cases.
The pilot project of Australia
The pilot project will start on March 31 and end on May 31. A final report on the findings, including an evaluation of the numerous use cases created, is scheduled for publication on June 30.
Offline payments, tax automation, and a CBDC for “trusted Web3 commerce” are among the use cases being tested. Banks, including the Commonwealth Bank and Australia and New Zealand (ANZ) bank, are among the trial’s participants and payment service providers like Mastercard.
“The pilot and broader research study that will be conducted in parallel will serve two ends,” said Brad Jones, assistant governor for financial systems at the RBA. “It will contribute to hands-on learning by industry and add to policymakers’ understanding of how a CBDC could potentially benefit the Australian financial system and economy.”
One of the companies chosen as a trial participant, blockchain company CANVAS, co-founder and CEO David Lavecky, informed Cointelegraph that their selection was made to investigate the possible advantages of employing a CBDC in the context of tokenized foreign exchange (FX) transactions.
The FX and remittance markets, according to Lavecky, are “enormous,” with trillions of dollars changing hands every day. And what’s more astonishing is that it goes so slowly on ancient tracks.
He believes that CBDCs and digital currencies can move money far more quickly and inexpensively than these traditional methods while enabling these marketplaces to function outside regular business hours.
“For example, when you’re sending money to New Zealand from Australia, the cut-off was like 1 or 2 pm. So a lot of that friction and capability gets put away when you start moving into digital currencies and CBDCs.”
While Lavecky acknowledges that privacy concerns are a common reason people oppose CBDCs, he also emphasizes that this effort was far more concerned with considering prospective use cases and determining if it would be beneficial to issue a CBDC.
“There’s been no decision made about whether a CBDC would be issued and what technology it would use; this is very much just research around capabilities and what’s possible really. So understanding that privacy is a concern, that’s something there can be solutions put forward to, as part of the pilot.”
According to Eli Ben-Sasson, co-founder and president of blockchain scaling technology company StarkWare, the pilot program is “a crucial step in the path” to integrating blockchain into traditional banking, he adds. StarkWare offers its zero knowledge (zk) rollup engine StarkEx.
“What we very much need is a set of use cases that show people new digital currencies aren’t empty hype, but rather can do stuff we all need in our normal lives. The question is how to best do this.”