RBA Wholesale CBDC Trial ‘Project Atom’ Heralded a Success

While the Reserve Bank of Australia (RBA) has been investigating central bank digital currencies (CBDCs) for some time, its policy position has not always been clear. However, in a report released this week, there are signs that wholesale CBDCs may indeed be around the corner.

Project Atom Forecasts Efficiency Gains

Project Atom was a collaborative research project undertaken during the past year exploring the potential use and implications of a wholesale CBDC using distributed ledger technology (DLT). The CBDC itself is intended to be used by wholesale market participants (ie, banks and other financial institutions) for the funding, settlement and repayment of a tokenised syndicated loan on an Ethereum-based DLT platform.

According to the RBA, the results of the trial demonstrated that “the digitisation of syndicated loans on a DLT platform could provide efficiency gains and reduce operational risk by replacing highly manual and paper-based processes”.

Other aspects of the trial involved exploring the programmability of CBDCs that “could improve efficiency and reduce risk in transactions”.

Project Atom demonstrated the potential for a wholesale CBDC and asset tokenisation to improve efficiency, risk management and innovation in wholesale financial market transactions. The project also demonstrated the benefits of collaboration in advancing our knowledge in this area. The bank will continue its research on CBDCs as part of its strategic focus area on supporting the evolution of payments.

Michele Bullock, Assistant Governor (Financial System), RBA

Overall, despite noting potential improvements in efficiency, risk management and innovation, the RBA noted that more detailed policy work was required before the introduction of any CBDCs.

Retail CBDCs?

As reported by Crypto News Australia in February of this year, the position then was that there was no strong case for issuing retail CBDCs. And this, more or less, appeared to be the case until mid-November, but as of this week things have seemingly moved in the opposite direction, as noted by ABC business reporter David Taylor:

This shift in direction is not entirely unexpected, as CBDCs naturally confer more powers on those in control. They represent programmable money, a behavioural finance innovation enabling central bankers to use the tools at their disposal to target specific individuals, groups or demographics to drive whatever consumer behaviours they are looking to achieve.

Perhaps this is why Edward Snowden, a known privacy advocate, regards them as a tool for financial surveillance. It’s also a reason why many are turning to Bitcoin, a truly decentralised alternative.