Australia and ConsenSys study launch of Ethereum (ETH) based CBDC

  • Australian research project with ConsenSys will explore launching CBDC on Ethereum-based DLT platform (ETH).
  • CBDC research project on Ethereum for Australia’s central bank is projected to be completed by the end of 2020.

In a press release, the Reserve Bank of Australia (RBA) announces a collaboration with the Commonwealth Bank, Perpetual, and the Ethereum enterprise studio ConsenSys, among other partners. The aim of the cooperation will be to initiate a research project for a possible deployment of a CBDC on a distributed general ledger (DLT) platform based on Ethereum.

Among other things, the investigation should provide information on the implications, uses and benefits of issuing a digital currency issued by the central bank (CBDC) of Australia. Therefore, the partners will develop a Proof of Concept (POC) on the minting of a tokenized CBDC. The digital currency should be able to be used as a medium of exchange in a wholesale market for “the financing, settlement, and repayment of a syndicated tokenized loan” that will operate on the Ethereum-based platform.

Australia enters the CBDC race with Ethereum (ETH)

In addition to the above, the POC shall report on the use of the CBDC to make atomic deliveries in comparison to payment settlements on the Ethereum-based platform. The Australian Central Bank has also requested that information be provided on other potential use case and other features that could be applied with a tokenized CBDC. RBA Assistant Governor, Michele Bullock, said:

With this project we are aiming to explore the implications of a CBDC for efficiency, risk management and innovation in wholesale financial market transactions. While the case for the use of a CBDC in these markets remains an open question, we are pleased to be collaborating with industry partners to explore if there is a future role for a wholesale CBDC in the Australian payments system.

The bank has historically taken a position against the issuance of a CBDC. In 2017, the president of Australia’s leading banking institution said that a CBDC would not be launched. This position was confirmed in the last RBA report on the efficiency of the means of payment in the country.

According to the statement, the project is expected to be completed before the end of this year. A report on its results and discovery will then be published in the first half of 2021. As reported by CNF, ConsenSys has played a central role in the development of CBDCs.

Last week it was announced that the company is part of the Bank of Thailand’s project to develop a Proof of Concept on an Ethereum-based platform. The initiative is similar to the one proposed by the RBA but will be based on the experience of partners Siam Cement Group and Digital Ventures in developing blockchain payment solutions.

With the seemingly imminent launch of the digital Yuan, countries in the Asian giant’s orbit appear to be increasing their efforts to develop CBDCs. It is likely that the financial authorities of these countries are considering the disadvantages of relying on a currency controlled only by China to continue their trade relationship.