The Reserve Bank of Australia (RBA) is focusing on developing a wholesale CBDC over the next three years, with a roadmap that includes the Acacia project, an advisory forum, and an expansion of the sandbox mechanism.
On September 18, the Reserve Bank of Australia (RBA) announced that it will prioritize the development of a digital currency (CBDC) for transactions between large organizations, instead of for individual consumers. This information was announced by RBA Deputy Governor Brad Jones at the Intersekt conference in Melbourne.
He said the development of a wholesale CBDC would bring more practical benefits to both banks and businesses in Australia. In contrast, the retail version of the CBDC, eAUD, has not yet demonstrated the ability to generate significant innovation.
The RBA expects that wholesale CBDC will help reduce counterparty risk, increase transparency and auditability in financial transactions. In addition, the application of this technology will help reduce operational risks, improve liquidity, reduce intermediation costs and improve regulatory compliance.
In particular, the implementation of a wholesale CBDC would allow the RBA to facilitate the exchange of assets and fiat currencies through a single digital platform. Blockchain technology and smart contracts would be used to simplify and automate complex financial transactions.
The RBA has outlined a three-year plan for research, development and testing of a wholesale version of the digital Australian dollar (eAUD). The first phase, Project Acacia, will run from the second half of 2024 to the second half of 2025 and will focus on assessing the potential of a wholesale CBDC and tokenized commercial deposits for cross-border payments and remittances.
Next, from the first half of 2025, the RBA will host advisory forums with experts from industry and academia. The aim of these forums is to enhance interaction between CBDC developers and users, and support the market's adaptation to digital technology and financial innovation.
Finally, the RBA plans to expand the regulatory sandbox by 2025, working with the Australian government to develop and promote new digital regulatory guidelines.
For the retail eAUD, the RBA said it would conduct a series of public consultations from mid-2025 to assess the real needs. Based on the results of the assessment and experience from other countries, the RBA will review the development of a retail CBDC from 2026. The RBA's decision to shelve the retail eAUD stems from concerns about the complexity of implementation, the potential to increase borrowing costs, trigger a banking crisis, and create difficulties in applying monetary policy.
Previously, Australia's retail CBDC pilot program, which was launched in 2022 and scheduled to end in early 2023, was extended to March 2023 to expand the scope of the trial to include financial institutions, fintech companies and government regulators. The program was officially completed in August 2023.
