Given the many issues that are yet to be resolved, any decision on a CBDC in Australia is likely to be some years away, the Reserve Bank of Australia (RBA) and Digital Finance Cooperative Research Centre (DFCRC) announced on Wednesday. The two organizations had started a research project last year to explore how a central bank digital currency (CBDC) could be used by industry to enhance the functioning of the payments system.
The findings revealed that an Australian CBDC could support offline electronic payments and enable ‘smarter’ payments or complex transactions which would be more economical and less risky. Tokenization of assets on distributed ledger technology (DLT) platforms had several benefits, and there was potential for privately issued stablecoins that were fully backed by CBDC.
However, the report focused on the need for further research due to a range of legal, regulatory, technical and operational issues. Cryptographic keys were required to perform actions on the pilot CBDC platform but finding affordable and adequately secure solutions for key management was a challenge for companies that did not have capability operating on other DLT networks. Integrating a CBDC platform with industry use case applications was also challenging.
The privacy question remained unanswered for Australia too. The design decisions required to effectively support the variety of needs for privacy and data sharing are challenging, and the technologies to implement those requirements on a single CBDC platform are also complex, warranting further research, the report said.