While the RBA believes the case for issuing central bank digital currency (CBDC) for household use has not been established, it has considered the option of issuing CBDC to wholesale market participants in specialized payment and settlement systems.

The RBA’s proposed CBDC would be a form of stablecoin denominated in the sovereign currency and convertible at face value with other forms of money.

The RBA noted a number of potential benefits, including increased speed and stability of payments and the ability to build “programmable money” – that is, digital money with conditions relating to how it can be spent or transferred. A CBDC can also create “atomic transactions” where all parts of a transaction are executed or none, further reducing settlement risk.

The RBA also revealed that it has developed a proof of concept for a wholesale settlement system running on a private, permissioned ethereum network.

The proof of concept simulates the issuance of central bank-backed tokens to commercial banks in exchange for exchange settlement account balances, the exchange of these tokens between commercial banks, and their eventual redemption by the central bank.

The RBA intends to expand the study with one or more external partners.