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According to a white paper, the Reserve Bank of Australia, the nation’s central bank, collaborated with the Digital Finance Cooperative Research Centre to develop this whitepaper outlining the entire initiative.
The pilot CBDC will be known as the eAUD, and the eAUD will be an RBA obligation denominated in Australian dollars. With this pilot program, the Australian Central Bank aims to establish whether or not a Central Bank Digital Currency is appropriate for Australia. The Australian Central Bank has admitted that it has been working on the subject for the past few years.
Additionally, the Reserve Bank of Australia verified what everyone thought, but no one knew for sure. That is to say:
“Central banks globally are actively exploring the potential role, benefits, risks, and other implications of CBDC. This has involved the publication of discussion papers, public consultations, and the development of proofs of concept and CBDC pilots involving real financial transactions.”
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All We Know Regarding the Australian CBDC
Firstly, the pilot project is already underway and will continue for the first six months of the followingnext year:
“The project commenced in July 2022 and is expected to be completed around the middle of 2023. The project intends to test a general-purpose pilot CBDC issued as a liability of the RBA for use in real-world pilot implementations of services offered by Australian industry participants.”
The Australian Central Bank seeks responses to the following three questions:
- Which emerging business models and use cases would a CBDC enable that are not successfully supported by Australia’s existing payments and settlement infrastructures?”
- What are the possible economic advantages of granting a CBDC in Australia?
- What operational, technological, policy and regulatory considerations may be necessary for the functioning of a CBDC in Australia?
Regarding participants and use cases, it is vital to note that the Central Bank Digital Currency pilot project has a local focus.
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On Ethereum, the CBDC Pilot Project Operates.
Add a new application to Ethereum’s resume. The highly centralised Australia CBDC pilot utilised its technologies to create a functional model at no additional expense.
“The DFCRC will develop and install the eAUD platform as a private, permissioned Ethereum (Quorum) implementation. The eAUD ledger will operate as a centralised platform, under the management and oversight of the RBA.”
There is no assurance, however, that the Reserve Bank of Australia will continue to use the platform if the Central Bank Digital Currency initiative is successful. The Central Bank utilised Ethereum only due to its convenience.
“The project is not evaluating the technology most suited to operating a CBDC. The CBDC pilot platform to be implemented is designed to be adequate for the use cases selected but is not intended to reflect the kind of technology that might be used to implement a CBDC if a decision was ever made to do so.”
To conclude, it is essential to recall the words of Matthew Mezinskis. A few months ago, the creator of Porkopolis Economics told the Oslo Freedom Forum:
“They like to be there to protect the bankers. So they know that if you drain deposits from the banks, and it only goes into a central bank’s CBDC currency, it can’t get loaned upon, it can’t get lent out. Then that’s a problem for the banking system. So they’re trying to figure that out right now. The common solution is that there will be limits, maybe $1000 equivalent, for every CBDC account. They’re trying to figure these things out.”
A pilot program appears suitable for determining these matters.