Australian central bank to study wholesale CBDC on Ethereum

The Reserve Bank of Australia has announced a collaboration with Commonwealth Bank, National Australia Bank, Perpetual and ConsenSys as part of a project to study the wholesale form of central bank digital currency (CBDC) based on the Ethereum blockchain.

According to the press release, the partners will develop a proof of concept for issuing a CBDC that wholesale-market participants will be able to use to settle and redeem tokenised syndicated loans.

Participants will study the implications of ‘atomic’ settlement on a blockchain platform under the ‘delivery versus payment’ principle and other potential capabilities of programmable and automated digital currencies.

“In this project, we aim to study the impact of CBDC on efficiency, risk management, and innovation in wholesale market operations,” said Michelle Bullock, Deputy Governor of the Reserve Bank of Australia.

The question of using the digital currency on these markets remains open, she added, but the central bank intends to determine whether CBDC has a role in the future Australian payments system.

The partners are expected to complete the project by around the end of 2020, with a report outlining key findings due to be published in the first half of the following year.

Earlier, the Reserve Bank of Australia expressed skepticism about CBDC and found no grounds to follow the lead of other countries pursuing work on this topic.

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