Australia and Mastercard to Mastermind CBDC Test Pilot

Learn about Australia’s move towards developing digital currency with a series of CBDC pilot projects to explore its use cases.

A robotic kangaroo holding a coin that has the text "Reserve bank of Australia" on it in an Australian outback type landscape
  • The Reserve Bank of Australia (RBA) has begun developing its digital dollar and is currently in the testing phase.
  • The pilot is scheduled to be completed by mid-2023.
  • The projects involve a wide range of industry representatives.

Central banks worldwide are exploring the potential of Central Bank Digital Currencies (CBDCs) to facilitate secure and efficient payments in the digital age. 

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Australia has become the latest country to join this trend. The Reserve Bank of Australia (RBA) announced testing for its digital currency, the eAUD, unveiling a series of pilot projects to develop its use cases. Dilip Rao, the Program Director for CBDC at Digital Finance CRC, took to Twitter to share the news. 

Australian CBDC Draws Partnerships and Possibilities

The pilot project initiatives have started to explore a range of possibilities, such as offline payments, bond settlement, and securities trading, aiming for the project to be completed by mid-2023. Since the announcement of the project back in August of 2022, a wide range of industry representatives of all sizes have participated in the project’s developments.

Among the partners for the CBDC scheme are established names such as Mastercard, ANZ, Commonwealth Bank, Monoova, DigiCash, the Australian Bond Exchange, and others.

Speaking on the initiative’s goals, Brad Jones, Assistant Governor at the RBA said: “The pilot and broader research study that will be conducted in parallel will serve two ends – it will contribute to hands-on learning by industry, and it will add to policy makers’ understanding of how a CBDC could potentially benefit the Australian financial system and economy,”

Benefits of RBA’s CBDC Initiative

Several of the test projects have demonstrated benefits so far. For example:

  • Smart cards preloaded with funds have enabled offline payments in a consumer-to-merchant scenario.
  • An examination into the use of the dollar-pegged USDC stablecoin and how it could streamline foreign exchange trades and remittances.
  • Using the USDC stablecoin in the test project has also been shown to reduce potential counterparty risk.

On the Flipside

  • CBDCs are still largely untested, and their long-term effects on traditional financial systems have yet to be determined.
  • The implementation of CBDCs is often projected to be costly and complex, requiring significant investment in both technology and infrastructure.

Why You Should Care

The Reserve Bank of Australia’s partnership with major financial institutions, such as Mastercard and ANZ, highlights the potential for competition between CBDCs and decentralized digital currencies like Bitcoin and stablecoins. 

Governments worldwide appear to be positioning CBDCs to replace the individual financial freedoms offered by cryptocurrencies rather than to coexist with them. 

To understand more about what CBDCs are:
CBDC Explained: Everything You Need to Know About Central Bank Digital Currency

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Another country exploring a CBDC is Singapore read more about it here:
Singapore Prepares Digital Currency Pilot for Government Payouts and Vouchers

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Kyle Calvert

Kyle Calvert is a cryptocurrency news reporter for DailyCoin, specializing in Ripple, stablecoins, as well as price and market analysis news. Before his current role, Kyle worked as a student researcher in the cryptocurrency industry, gaining an understanding of how digital currencies work, their potential uses, and their impact on the economy and society. He completed his Masters and Honors degrees in Blockchain Technology within Esports and Business and Event management within Esports at Staffordshire University.