Australia Central Bank Launches CBDC Pilot Program on Ethereum

Image Credits: CryptoAvanza

The Central Bank of Australia has recently made an announcement about a trial program for a digital currency issued by the central bank (CBDC) that is built on the Ethereum blockchain. The Reserve Bank of Australia is currently experimenting with this new form of digital currency, which comes with some interesting capabilities like direct control, programmability, and secure settlement processes. To achieve this, the central bank teamed up with the Digital Finance Cooperative Research Centre (DFCRC) to work on this blockchain research initiative.

The Reserve Bank of Australia has also released an extensive 44-page research paper that delves into the potential uses and characteristics of an Australian CBDC. One of the main goals of this research was to engage with various players in the industry within a real-world transactional setting to effectively test this pilot CBDC.

During this pilot project led by the Reserve Bank of Australia, notable names in the cryptocurrency world such as Binance, Ripple, Stellar, and the traditional finance giant JPMorgan took part. Over the duration of the program, the central bank issued CBDCs valued at over half a million dollars. At the end of the project, all the CBDCs were redeemed before the project was concluded.

Prominent crypto lawyer Bill Morgan commented, “I believe this is a wholesale CBDC. If you follow the Reserve Bank’s documentation, you eventually reach Project Dunbar and discover the involvement of the BIS, the Central Bank of Malaysia, and the Monetary Authority of Singapore. These entities are working on prototypes for a shared settlement platform involving multiple CBDCs.”

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The CBDC was reportedly available in various denominations of Australian dollars, even down to the smallest unit. The Reserve Bank of Australia did not offer any interest on the holdings of the pilot CBDC. It’s important to note that the pilot CBDC platform did not support the execution of smart contracts or any other forms of blockchain code.

Furthermore, the pilot CBDC couldn’t be directly issued or transferred to third-party platforms. However, it did possess features like atomic settlement, ensuring that transactions were seamlessly integrated and enabling holders to exercise direct control without relying on intermediaries.