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RBA taps bank partners for crypto Australian dollar project

A hand reaching into a computer to grab digital money, indicating a rise in the use of cryptocurrency
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The Reserve Bank of Australia has stepped up its research into a cryptocurrency version of the Australian dollar, announcing a collaboration with 3 major ASX-listed companies on Monday morning.

Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB) and Perpetual Limited (ASX: PPT) will partner with the RBA on the Wholesale Central Bank Digital Currency Research Project.

The program will explore the use of central bank digital currency (CBDC) for transactions between financial institutions.

US software firm ConsenSys will also be involved, lending its expertise on Ethereum-based blockchain technology.

The Motley Fool has contacted CBA, NAB and Perpetual for comment.

What does the RBA want to get out of this?

The end result of the project will be a proof-of-concept in using cryptocurrency in the wholesale market for “the funding, settlement and repayment of a tokenised syndicated loan”.

“With this project, we are aiming to explore the implications of a CBDC for efficiency, risk management and innovation in wholesale financial market transactions,” said RBA assistant governor Michele Bullock.

“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.”

The project should be completed by the end of the year, with a report published in the first half of 2021.

A crypto-dollar has been years in the making

RBA has toyed with the idea of a digital version of the Australian dollar for several years.

In 2017, a group of Australian fintech startups secretly approached the central bank with the concept.

FlashFX was the first local startup granted a financial services licence to transfer money internationally using distributed ledgers, also known as blockchain technology.

“A government-endorsed digital Australian dollar has the potential to lead to increased trust and certainty, particularly to grow the digital currency marketplace,” FlashFX chief enabling officer Nicolas Steiger said in 2017.

“It would also stop multiple private parties creating a confusing array of ‘Australian dollars’ with no official backing.”

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Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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