Digital currency tested by CBA and ANZ as the RBA seeks to stave off threat of cryptocurrency

The real-world viability of non-physical forms of currency are being explored as the RBA tests new digital payments with e-AUD.

A new form of digital money could be introduced for businesses and consumers in Australia as Commonwealth Bank and ANZ work with the Reserve Bank to test its merits.

Research has been undertaken by the RBA into a possible central bank digital currency (CBDC), which it said could be designed for retail use – a digital version of banknotes – or for wholesale use.

The currency, according to the RBA, would serve as digital banknotes, having previously been referred to as “e-AUD”.

The RBA said CBDC could support the policy objectives of banks like safeguarding public trust in money and promoting efficiency, safety, resilience and innovation in payment systems and financial market infrastructures.

“Our research has been looking at various possible use cases, exploring the potential benefits, opportunities and challenges associated with CBDC, and examining how a CBDC could be designed and developed if a decision was ever taken to implement one,” the RBA said.

The RBA is testing the viability of a new form of digital currency. Picture: NCA NewsWire/Christian Gilles

The concept has been investigated by central banks across the globe as companies work to safeguard government-backed funds against the looming threat of cryptocurrency.

The RBA has now announced 14 pilot projects designed to test how real money would be used in CBDC form by engaging banks and other industry players.

The tests will be undertaken in the coming months and will be used to determine how the currency might help solve issues.

CBDC will be tested for its usefulness in shortening delays in international payments, providing consumers with digital money they can use without having to go to a bank, and supporting small businesses with GST paperwork.

Commonwealth Bank Australia blockchain and digital assets managing director Sophie Gilder suspects CBDC or something similar would be used in Australia in the next seven to 10 years.

“There’s not a major economy in the globe that’s not looking at what a future where there’s a CBDC could look like,” she told Sydney Morning Herald.

CBA’s Sophie Gilder believes a central digital currency is at least seven years away for Australia. Picture: NCA NewsWire/Bianca De Marchi

“Australia is not likely to lead in this space; we are more likely to follow.”

Along with ANZ, CBA is working to test how nature-based assets like carbon credits could be traded through “tokenisation” which would involve real-world assets having digital tokens.

ANZ is also planning to test how CBDCs could provide “digital cash” when no online connection is available, like in the event of an internet outage.

“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,” RBA’s assistant governor for the financial system Brad Jones said.

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