Australia's Central Bank To Pilot Digital Currency This Month, Teams Up With Mastercard, Others

Australia's central bank is studying the possibility of launching a central bank digital currency (CBDC) in the country as part of a research project with the Digital Finance Cooperative Research Center (DFCRC), and it has tapped payments giant Mastercard and other financial industry stakeholders to participate in the pilot.

The project looks to "explore potential use cases and economic benefits" of a CBDC in Australia, the Reserve Bank of Australia (RBA) said in a press release Thursday. A report on the project is expected to be out sometime in the "middle of the year," the bank said.

"We are delighted with the enthusiastic engagement by industry in this important research project," Brad Jones, assistant governor of the financial system at the RBA, said, as per the press release. He added that the live pilot project and broader research study should "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 initial stage of the project included the selection of industry participants out of 140 proposals that could demonstrate potential use cases of a digital currency.

The financial industry providers selected to participate in the pilot include Mastercard for research on interoperable CBDC for trusted Web3 commerce, Unizon for tokenized bills, Canvas Digital for tokenized FX settlement and Australia and New Zealand Banking Group Ltd. (ANZ) for CBDC distribution.

The DFCRC said in a project description regarding the use case pilot involving Mastercard that the aim is to allow holders of electronic Australian dollars (eAUD) to purchase nonfungible tokens (NFTs) on the Ethereum public blockchain while ensuring that the transactions are controlled only by authorized parties.

Aside from the pilot research, other projects under RBA's partnership study with DFCRC include some that will address issues related to offline transactions with the use of CBDC, CoinDesk reported.

A project description published by DFCRC noted that a trial has been proposed for offline transactions using CBDC at Southern Cross University and RMIT University.

"The aim is to demonstrate how an organization like a university can step in and provide immediate financial support through the disbursement of CBDC in emergency situations," the DFCRC said, according to the project description.

The RBA's CBDC pilot kicked off in August 2022, with the DFCRC stating at the time that the pilot's key objectives were to identify and understand possible use cases, benefits and risks of CBDC use in Australia.