The Reserve Bank of Australia (RBA) is looking into the potential use and implications of a wholesale form of central bank digital currency (CBDC) using distributed ledger technology (DLT) -- blockchain.
In undertaking work, the RBA is partnering with the Commonwealth Bank of Australia, the National Australia Bank, investment advisory firm Perpetual, and blockchain company ConsenSys Software.
The five participant organisations will work collaboratively on the project that will involve the development of a proof-of-concept for the issuance of a tokenised form of CBDC.
The tokenised form of CBDC is expected to be used by wholesale market participants for the funding, settlement, and repayment of a tokenised syndicated loan on an Ethereum-based DLT platform.
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The proof-of-concept, the RBA said, will be used to explore the implications of "atomic" delivery-versus-payment settlement on a DLT platform, as well as other potential programmability and automation features of tokenised CBDC and financial assets.
The project, expected to be completed around the end of 2020, forms part of ongoing research at the Reserve Bank on wholesale CBDC. The parties intend to publish a report on the project and its main findings during the first half of 2021.
"With this project, we are aiming to explore the implications of a CBDC for efficiency, risk management, and innovation in wholesale financial market transactions," RBA financial system assistant governor Michele Bullock said.
"While the case for the use of a CBDC in these markets remains an open question, we are pleased to be collaborating with industry partners to explore if there is a future role for a wholesale CBDC in the Australian payments system."
In a submission to the Select Committee on Financial Technology and Regulatory Technology and its