The Reserve Bank of Australia will test a digital currency as part of a “closed” pilot program as part of a collaborative research project into how it could be used by consumers and businesses, which is expected to last approximately one year. year.
Australia’s central bank has previously declared interest in the digital currency, which could be a digital equivalent of the dollar and compete with private cryptocurrencies, but the research project announced by the bank on Tuesday with the Digital Finance Cooperative Research Center would focus on how such an asset might actually be used.
The director general of the research center, Andreas Furche, whose organization is the product of a collaboration between industry, academia and government, said that it had already been proven that a digital banking currency plant was technically feasible. “The key research questions now are what economic benefits a CBDC (central bank digital currency) might enable, and how it might be designed to maximize those benefits,” Furche said.
In a press release, the Reserve Bank said that previous research by central banks around the world had focused on issues such as how distributed ledger technology, a hallmark of cryptocurrencies, could be used to a currency backed by the RBA.
But Michele Bullock, deputy governor of the RBA, said Tuesday’s draft was the next step in his research. “We look forward to engaging with a wide range of industry participants to better understand the potential benefits a CBDC could bring to Australia,” said Bullock.
The project would involve an “isolated environment” in which a pilot digital currency would be used that would have an actual claim on the Reserve Bank. Participants selected by the bank and the research center will develop projects that demonstrate how digital currency could be used to help businesses and households in this context. A report will be published at the end.
RBA Governor Philip Lowe has previously warned that a risk of a central bank digital currency is that it could cause bank runs if nervous consumers use it to withdraw wealth from commercial banks and park it with the RBA in case of a crisis.
Privately minted cryptocurrencies have performed poorly this year, with even some that are intended to be pegged stably to the US dollar being wiped out.