Australia Announces eAUD CBDC, Ropes In Mastercard Pilot for Testing

The Reserve Bank of Australia is tapping into the next, more advanced phase of fine-tuning its e-currency, dubbed eAUD. The country, which has been working on the development of its central bank digital currency (CBDC) for some time, has decided to introduce the eAUD in its pilot phase. The development was confirmed by the Reserve Bank of Australia (RBA) on Thursday, March 2nd. The eAUD CBDC will essentially represent the Australian dollar on the blockchain, making transaction details immutable and therefore more transparent.

The RBA has onboarded a group of fintech players to support the eAUD-CBDC pilot. These include MasterCardthe Australia and New Zealand Banking Group (ANZ), the Commonwealth Bank, and local crypto players such as Monoova and DigiCash.

“The pilot and broader research study, being conducted in parallel, will serve two purposes – it will contribute to practical industry learning and enhance policymakers’ understanding of how a CBDC could potentially benefit Australia’s financial system and economy,” said Brad Jones, deputy governor (financial system) at the RBA, in one prepared statement.

A CBDC is essentially a representation of a country’s fiat currency on the blockchain network. Once implemented, CBDC transactions will reduce central bank reliance on physical currencies and save a fortune on printing and managing cash.

While ANZ will test the use of Australia’s CBDCs in offline payments and nature-based asset trading, Mastercard will test eAUD’s interoperability quotient.

GST automation, money custody and corporate bond settlement are among other areas where the use of Australia’s CBDC will be reviewed during its pilot.

Australia’s Digital Finance Cooperative Research Center (DFCRC) is also working with the RBA on the CBDC initiative. DFCRC is a 10-year US$180 million (approximately Rs.1,500 billion) research program funded by industry partners and universities in conjunction with the Australian Government.

“The variety of proposed use cases covers a range of issues that could potentially be addressed by CBDC, including some involving the use of CBDC for the atomic settlement of tokenized asset transactions. The process of validating use cases with industry participants and regulators will stimulate further investigation into design considerations for a CBDC that could potentially play a role in a token economy,” said Dilip Rao, Program Director – CBDC at the DFCRC, as part of the preparatory statement.

In September last year, the RBA released a White paper which claimed that the eAUD pilot could be completed by mid-2023.