Following treasurer rally Frydenberg’s “payments and crypto reform plan,” the RBA has revealed a report exploring DLT school and wholesale CBDC issuance.
The reserve bank of Australia (RBA) revealed a report into its two-year research project into wholesale central bank digital currencies (CBDCs) that emphasised the advantages of digitizing and autonomizing manual, paper-based banking processes using distributed ledger technology (DLT).
The report marks the conclusion of the biennial project named “Project Atom” that was conducted in partnership with the Commonwealth Bank of Australia (CBA), National Australia Bank (NAB), Perpetual, and ConsenSys, in conjunction with extra input from King & Wood Mallesons.
Commenting on Project Atom, RBA’s assistant governor (Financial System) Michele Bullock noted that it “demonstrated the potential for a wholesale CBDC and plus tokenization to enhance potency, risk management and innovation in wholesale money market transactions.”
A wholesale CBDC refers to a central bank issued digital currency that's designed for the settlement of interbank transfers and transactions between money establishments, as opposition a retail CBDC that's meant for public use.
The CBDC analysis was revealed on Dec. 8, a similar day treasurer and Deputy Liberal leader josh Frydenberg disclosed an bold “payments and crypto reform plan” for fintech and crypto regulation in Australia. the government has indicated it's in favor of at least six crypto reform proposals suggested by a Senate Committee, and is investigation others.
The project consisted of a proof-of-concept (POC) for the issue of a “tokenized variety of CBDC” that would be used during a digitized wholesale syndicated loan market. The testing transpire on an Ethereum-based distributed ledger technology (DLT) platform.
The report found that a wholesale CBDC backed by DLT technology might considerably increase potency and scale back operational risk by “replacing extremely manual and paper-based processes associated with the origination and servicing” of information, transactions, loan payments and settlements to call a couple of.
Some problems that the RBA highlighted but, involved “transaction privacy, finality, outturn and efficiency” of CBDC and DLT usage notably associated with blockchains that don't seem to be designed for wholesale functions.
The POC experimented with a two-tier model for the issue and distribution of a CBDC, whereby the RBA issued the digital currency to the business banks then the banks unfolded accessibility to “eligible wholesale market participants that they sponsor onto the platform.”
( Brian Quarmby, Cointelegraph, 2021)