[LINK] Central Bank Digital Currency (CBDC)

[Stephen Loosley]

From: David<mailto:dlochrin at aussiebb.com.au>
Sent: Monday, 15 May 2023 12:48 PM
To: Kim Holburn<mailto:kim at holburn.net>; Link mailing list<mailto:link at anu.edu.au>
Subject: Re: [LINK] Central Bank Digital Currency (CBDC)

On 14/05/2023 12:42 pm, Kim Holburn writes:

>> I really don't understand the angst here.  We already have digital
>>  currency. When was the last time you paid actual cash for anything?
>
> David writes
>
> Any mention of "digital currency" may conjure up private currencies like
> bitcoin, which AFAIK have no asset backing and can be extremely volatile.
> Whatever the case, direct exposure of a Central Bank to the  unpredictable
> whims of the general public seems unwise to me ..  _David Lochrin_

Yes, good points all gentlemen. CBDC,  perhaps a solution looking for a problem?

For example, the RBA Project ATOM noted below? “The project involved the development of a proof of concept for the issuance of a tokenised form of CBDC that could be used by wholesale market participants for the funding, settlement and repayment of a tokenised syndicated loan on an Ethereum-based DLT platform.”

Anyway, here’s what our RBA has to say regarding Central Bank Digital Currency (CBDC)

“Central Bank Digital Currency”

Ref: https://www.rba.gov.au/payments-and-infrastructure/central-bank-digital-currency/

The Reserve Bank is actively researching central bank digital currency (CBDC) as a complement to existing forms of money.

The Reserve Bank currently issues two forms of money:

physical money in the form of banknotes, which can be used by households and businesses to make payments, and

digital money in the form of balances held in accounts that commercial banks and some other types of financial institutions can hold at the Reserve Bank to settle payment obligations between each other.

A CBDC would be a new digital form of money issued by the Reserve Bank.

It could be designed for retail (or general purpose) use, which would be like a digital version of banknotes that is essentially universally accessible, or for wholesale use, where it is accessible only to a more limited range of wholesale market participants for use in wholesale payment and settlement systems.

A CBDC could potentially support a number of the Bank's policy objectives, including safeguarding public trust in money and promoting efficiency, safety, resilience and innovation in payment systems and financial market infrastructures.

Our research has been looking at various possible use cases, exploring the potential benefits, opportunities and challenges associated with CBDC, and examining how a CBDC could be designed and developed if a decision was ever taken to implement one. Distributed ledger technology (DLT) is one possible technology platform we have been exploring that could be used to implement a CBDC. We have been collaborating with external parties on this research and will continue to do so.

Projects

Initial Digital Finance Cooperative Research Centre Announcement

Media release issued on 9 August announcing commencement of research project

‘Australian CBDC Pilot for Digital Finance Innovation’ 821KB (White Paper)

Project Atom

A collaborative project undertaken in 2020–2021 between the Reserve Bank, Commonwealth Bank of Australia, National Australia Bank, Perpetual and ConsenSys, with additional input from King & Wood Mallesons. The project involved the development of a proof of concept for the issuance of a tokenised form of CBDC that could be used by wholesale market participants for the funding, settlement and repayment of a tokenised syndicated loan on an Ethereum-based DLT platform.

Project Atom report 780KB (Link does not work)