The Reserve Bank of Australia (RBA) has announced plans to launch a pilot program for a central bank digital currency (CBDC), which will be led by former Ripple executive, Dilip Rao, and in collaboration with the Digital Finance Cooperative Research Centre (DFCRC).
The pilot program aims to answer three key research questions:
- What new business models and use cases could a CBDC support?
- What potential economic benefits could a CBDC offer Australia?
- What operational, technological, policy, and regulatory issues must be addressed in implementing a CBDC in Australia?
The RBA has laid out a timeline for its CBDC project, with the pilot program scheduled to conclude in mid-2023. Industry participants will be engaged on CBDC design and usage in September and October of 2022, with parties able to express an interest until October 31. In November, select participants will be allowed to test use cases on the CBDC platform, with the central bank selecting use cases for the pilot in December. From January to April 2023, the RBA will conduct its pilot with a focus on the selected use cases, and the central bank will publish a report with its findings in mid-2023.
Australia’s CBDC pilot, eAUD, will be operated by the RBA while the DFCRC will implement it. Access will be restricted to approved participants, and the platform will include a payment gateway, KYC measures, JSON-RPC APIs, and ERC-20 smart contract interfaces. eAUD will be considered a liability of Australia’s central bank and will be denominated in Australian dollars, with one cent being the smallest unit. The RBA will set an upper limit on the number of digital dollars issued, and no interest will be paid on eAUD holdings. Non-Australian individuals and entities will not be allowed to participate.
End users will be able to hold their digital Australian dollars in a custodial or non-custodial wallet, but they must be invited to participate in the pilot by an approved use case provider. All pilot participants will undergo KYC or have their identity validated by an approved use case provider. The CBDC pilot platform will only record balances and transactions, with functionality and KYC data held on separate platforms developed and operated by selected use case providers.
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