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The Reserve Bank of Australia, in collaboration with the Digital Finance Cooperative Research Centre, has wrapped up its research into the potential applications of a central bank digital currency (CBDC). Released on August 23, the study provided insights into where a digital dollar could fit and also highlighted scenarios where other financial instruments could achieve the same results.
The research project focused on the CBDC's potential in improving four primary financial areas. One significant finding was that the digital currency could facilitate advanced payment setups, exceeding what current payment systems offer. The study also shed light on the potential of CBDCs to drive financial creativity, especially in the debt securities market. The adoption of this digital currency could also potentially give a boost to the growth of private digital money sectors and might contribute to the broader digital economy by enhancing resilience and inclusiveness.
Companies that took part in the research emphasized the CBDC's potential for "atomic settlements." In essence, this means transactions that happen instantly and simultaneously. The report also discussed how CBDC programmability could streamline and secure intricate business operations.
However, the structure of the CBDC research posed some challenges. Given its design as a genuine legal claim on the Reserve Bank of Australia, participants faced confusion regarding its legal standing and how it would be regulated. Some participants grappled with determining if they were offering custodial services or if they were engaging in a regulated financial activity due to their involvement with the CBDC during the pilot. The study recommended that these concerns be addressed in future legal and regulatory adjustments if a CBDC were to be officially launched.
While the CBDC presents various advantages, the report recognized that several of these benefits could be realized using other financial tools, such as tokenized bank deposits or asset-backed stablecoins. The study concluded by emphasizing the need for further research to fully understand the complete range of potential benefits a CBDC might offer to the Australian payment system.
