The central bank of Australia has concluded its pilot programme for a central bank digital currency that examined use cases for a future digital dollar. It found that the programme might be helpful in four key areas, including facilitating complex payments and asset tokenization.
On August 23, the Reserve Bank of Australia and the Digital Finance Cooperative Research Centre published their findings in a 44-page paper that also included a number of situations in which a CBDC wasn’t strictly necessary to realize the intended use case.
The pilot programme identified four key areas in which a CBDC could be used to make improvements, one of which was the ability to make “smarter” payments by enabling a variety of intricate payment arrangements that were not already supported by existing payment systems.
The research also explained how a CBDC may foster innovation in the growing private digital money sectors, assist financial innovation in markets for debt securities, and improve inclusivity and resilience across the board in the larger digital economy.
A variety of proposals from the 16 companies that took part in the pilot programme emphasized the potential advantages of a CBDC in enabling “atomic settlements” – a simultaneous and instantaneous transaction settlement.
Programmability was also noted as a benefit a CBDC might provide, since it could boost productivity and lower risk in a variety of intricate corporate operations.
Instead than being a proof-of-concept, the CBDC pilot programme was designed as a legitimate legal claim against the RBA, which left participants confused about its legal standing and regulatory handling.
Because they held or transacted in the pilot CBDC, several participants weren’t sure if they were handling a regulated financial product or offering custody services, according to the report. If there are any legal or regulatory changes made in conjunction with the issuance of a CBDC, it would be great if these problems were anticipated and addressed.
Despite highlighting the situations in which a CBDC may be helpful, the paper acknowledged that many benefits could also be obtained by other means, such as privately issued tokenized bank deposits or asset-backed stablecoins.
It was unclear whether CBDC was the only factor necessary to get the expected economic results.
Overall, the analysis concluded that while the establishment of a CBDC would improve efficiency and resiliency in some components of the Australian payments ecosystem, further research is needed to fully explore the advantages.
