RBA selects CBA, ANZ to pilot use cases for central bank’s digital currency

The Reserve Bank has chosen 14 participants, including major banks CBA and ANZ, to pilot the potential benefits of a central bank digital currency.

The RBA is moving forward with a pilot project on a central bank digital currency. Picture: Joel Carrett/NCA NewsWire

Australia and New Zealand Bank and Commonwealth Bank, alongside a handful of other payments companies, have been selected by the Reserve Bank to take part in a pilot exploring the potential benefits of a central bank digital currency.

The central bank on Thursday said the project, involving 14 financial companies, will use a limited-scale pilot CBDC that is a real digital claim on the RBA.

RBA assistant governor Brad Jones said the trial would help policymakers understand how a CBDC could potentially benefit the Australian financial system and economy.

“We are delighted with the enthusiastic engagement by industry in this important research project. It has also been encouraging that the use case providers that have been invited to participate in the pilot span a wide range of entities in the Australian financial system, from smaller fintechs to large financial institutions,” he said.

“The pilot and broader research study that will be conducted in parallel will serve two ends – it will contribute to hands-on learning by industry, and it will add to policymakers’ understanding of how a CBDC could potentially benefit the Australian financial system and economy.”

The Digital Finance Cooperative Research Centre (DFCRC), which is working with the RBA on the project, said the use cases proposed covered a range of problems that could potentially be addressed by a central bank digital currency, “including some that involve the use of CBDC for atomic settlement of transactions in tokenised assets”.

“The process of validating use cases with industry participants and regulators will inform further research into design considerations for a central bank digital currency that could potentially play a role in a tokenised economy,” DFCRC program director Dilip Rao said.

The use cases include offline payments, nature-based asset trading, superstream payments, funds custody, tokenised bills and CBDC distribution.

ANZ said part of its role in the pilot would be to distribute CBDC to selected participants on behalf of the RBA.

It will also take part in three use cases across super fund payments, offline payments, and the tokenisation of carbon credits.

ANZ Banking Services Lead Nigel Dobson said the pilot important opportunity for the Australian economy and broader payments ecosystem.

CBA will be involved in use cases surrounding nature-based asset trading and GST automation.

CBA’s managing director of blockchain and digital assets, Sophie Gilder, said the bank’s focus on sustainability, productivity and emerging technologies aligned with the goals of the RBA and other industry participants.

“Through CBA’s experimentation with blockchain technologies since the mid-2010s, we have been closely attuned to the importance of global developments in innovative payment methods including CBDCs,” she said.

“Two areas where we see the most potential are real asset tokenisation and smart payments, and we have chosen to explore use cases in those domains.”

She said it was essential that Australia continues to build its capabilities in this “key area of finance” and explore the possibilities of emerging technologies.

“We are therefore committed to working with industry and organisations like the DFCRC and RBA to advance innovation and deliver real, tangible benefits to our customers and Australia as a whole.”

Other participants include Canvas Digital, Intuit, Fame Capital and MasterCard.

Canvas CEO David Lavecky said the pilot program was a critical development for digital finance in Australia.

“CBDCs such as eAUD are fundamental building blocks of a digital economy and enable instant, secure and low cost transactions,” he said.

Canvas’s role in the pilot will be to demonstrate the benefits of using a CBDC in the context of tokenised foreign exchange transactions.

“The potential markets for CBDCs in foreign exchange trading and international remittances are significant,” Mr Lavecky said.

“The use of eAUD and Digital Currencies in FX trading and international remittances enables frictionless, 24x7x365 trading and global movement of foreign currencies, dramatically increasing speed, reducing risks and lowering costs over traditional FX trading and remittance networks.”

Originally published as RBA selects CBA, ANZ to pilot use cases for central bank’s digital currency