Australia Issues White Paper for Central Bank Digital Currency
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Australia IssuesWhite Paper for Central Bank Digital Currency
Reserve Bankof Australia is researching the potential benefits of launching a central bankdigital currency. The monetary authority released a white paper outlining itsgoals and invited interested parties to participate with proposals and suggestpilot projects.
CentralBank of Australia to Pilot CBDC Until Middle of 2023
The ReserveBank of Australia (RBA) has set out to explore use cases for a digital versionof the Australian dollar. It's collaborating on the project with the DigitalFinance Cooperative Research Centre (DFCRC), a research program funded by thegovernment and the financial sector. This week, the two released a white paperfor the central bank digital currency (CBDC).
The documenttitled "Australian CBDC Pilot for Digital Finance Innovation" detailsthe main objectives of the initiative and explains the design of the newcurrency. Members of the industry have been invited to propose use cases thathave the potential to improve the functioning of Australia's economy andfinancial system, the RBA announced.
The monetarypolicy regulator said that one of the key tasks is to also explore businessmodels that could be supported by a CBDC. The pilot project, which was launchedin July and will be completed in mid-2023, will also allow financialauthorities to better understand technological, legal, and regulatory aspectsassociated with the issuance of a central bank digital currency.
Compellinguse cases, wholesale or retail, will be included in the pilot and used toassess the rationale for an Australian digital currency, the RBA said. Awide range of stakeholders are welcome to take part in the project, includingfinancial institutions, fintech firms, public sector agencies, and techcompanies.
OnlyResidents and Domestic Companies to Hold Australian Digital Currency During PilotPhase
TheAustralian central bank also noted that the pilot digital currency, referred toas eAUD in the document, will be its liability and denominated in Australiandollars. The coins in circulation will be capped at an amount which will bedetermined by the RBA, taking into account the requirements of selected usecase providers.
OnlyAustralian residents and entities registered in the country will be able tohold eAUD and the holdings will not bear any interest. All end users will needto be invited by an approved use case provider or know-your-customer provider.The CBDC will be stored in both custodial and noncustodial wallets.
The ReserveBank of Australia specifically remarked that its research project does notreflect intentions to end the use of paper money. "The RBA is committedto ensuring Australians continue to have good access to physical cash for aslong as people need or want to use it," the authority emphasized.
Inmid-August, Australia's securities watchdog insisted that the increased popularityof cryptocurrencies makes a "strong case for regulation." ASICquoted a survey, according to which 44% of the country's retail investors heldcrypto in late 2021. Later that month, the Australian Treasury announced a planto stocktake crypto holdings.