Though Central Bank Digital Currencies (CBDCs) may have taken a hit in the US with the election of Donald Trump, interest in other countries remains consistent.
In Australia, two of the country’s major financial authorities are seeking industry feedback on a new initiative, ‘Project Arcadia’. The project seeks to explore how different forms of digital money and infrastructure can support the development of Australia’s wholesale tokenized asset market.
The Reserve Bank of Australia (RBA) and the Digital Finance Cooperative Research Centre (DFCRC), the Australian central bank and a government research department respectively, have requested that industry stakeholders engage in a consultation paper and potentially sign up to an Industry Advisory Group in the future.
“Shaping the future of money in Australia is a strategic priority of the RBA and the Payments System Board,” said Brad Jones, Assistant Governor (Financial System) at the RBA.
“The RBA, alongside the DFCRC, are seeking to engage with industry partners on Project Acacia to examine how innovation in wholesale markets could be enabled by new forms of digital money and supporting infrastructure.”
CBDCs have emerged as one of the most prominent examples of digital money in recent years, alongside privately held cryptocurrencies like Bitcoin and Ether and national currency-pegged stablecoins, like PayPal’s PYUSD.
The potential CBDCs have for digital transactions has caught the attention of various central banks. The UK’s Bank of England (BofE) has been evaluating the potential of a future digital pound, whilst the European Central Bank (ECB) is doing the same for a digital euro.
Australia’s RBA is not alone in this regard. In a speech at Fintech Australia’s Intersekt Conference back in September, Jones outlined that a retail CBDC could become more necessary as Australians – like other consumers – move increasingly away from physical cash and towards digital payments.
He did, however, also note the concerns some people have expressed around CBDCs, namely around privacy. A CBDC could never be fully anonymous due to a need for the central bank to track potential criminal uses of money, he noted.
This has been the main talking point Donald Trump in the US has had on CBDCs. The outspoken politician and businessman told supporters many months before last week’s election victory that he would put an end to any talk of a CBDC in the US, whilst saying in separate speeches that he wants to protect private cryptocurrency ownership.
Turning back to Australia, the RBA has specified which exact areas it would like feedback on. The bank is seeking input on the technical and functional capabilities of new forms of settlement infrastructure and digital money, including wholesale CBDCs and tokenised bank deposits, with the window for feedback closing on 11 December.
The consultation forms part of the RBA’s three-year roadmap for the exploration and development of a CBDC and other forms of digital assets in Australia, which Jones mapped out in his speech earlier this year.
Commenting on the new consultation, Jones continued: “The role that tokenised asset markets could play in improving the efficiency and resilience of wholesale payments and settlements, and in enhancing cross-border payments, are areas of particular interest.
“Our overarching aim here is to help address the larger question of how innovation in our financial system can best support the Australian economy in the digital age.’
