In what might seem like a dream to crypto fans, the Reserve Bank of Australia (RBA) is exploring whether the nation would benefit from a digital form of the Australian Dollar.
It will be a far cry from the example set by El Salvador. The nation adopted Bitcoin (CRYPTO: BTC) as legal tender in 2021.
Instead, the RBA plans to create its own digital currency, dubbed central bank digital currency (CBDC), as part of a trial. To do so, it's collaborating with the Digital Finance Cooperative Research Centre (DFCRC).
The pair will work on a pilot that will ultimately see the CBDC used in a ring-fenced environment.
Let's take a closer look at the RBA's latest pivot towards cryptocurrency-style tokens.
Could Australia soon have its own crypto-like currency?
Australia's central bank is looking into creating its own digital currency, testing potential uses and benefits in a pilot program.
However, crypto fans might not want to get too excited. The RBA's digital currency, unlike cryptocurrency, will be backed by the central bank. Thus, It will work just like the Australian Dollar.
RBA deputy governor Michelle Bullock reportedly told ABC's The World Today that the pilot's participants will purchase and use CBDC in a "closed loop" system. She continued:
I suspect where its role might be more important is perhaps in delivery versus payment for physical assets.
Possibly things like property, possibly things like gold — these sorts of things that might give businesses an opportunity to exchange real assets on a digital ledger for currency on a digital ledger.
A project that will oversee the development of the pilot is expected to take around a year.
It will look into innovative uses for a CBDC and business models that could be supported by its issuance. Finally, the project will consider some of the technical, legal, and regulatory considerations associated with a CBDC.
A paper will be published in the next few months further explaining the project. It will also detail how industry participants will be able to engage in the program.
DFCRC CEO Dr Andreas Furche commented on the research project, saying:
CBDC is no longer a question of technological feasibility.
The key research questions now are what economic benefits a CBDC could enable, and how it could be designed to maximise those benefits.
