Australia’s CBDC Prototype Bulk Deployment A Huge Success

Shortly after Australia reported its pioneering payments reform plan, the RBA has published a report, detailing the results of the initial test run of the wholesale issuance of the Australian CBDC, leveraging Distributed Ledger Technology (DLT).

The Reserve Bank of Australia (RBA) has embarked on a journey which started in 2019. The journey started as a developmental plan for the evolution of the country’s financial sector. The plan was tagged as ‘Project Atom’, it entails a road map for the deployment of the Australian Central Bank Digital Currency (CBDC). 

The major focus of Project Atom is on the wholesale CBDC, one that is different from the retail CBDC, which is the version that is available for public use. The wholesale CBDC represents a collection of CBDC tokens issued only to financial institutions for inter-bank transactions and ledger keeping.

On Dec.8, the same day Australia announced the partial approval of its pioneering cryptocurrency reforms and the total overhauling of its payment systems, the RBA published a report detailing the results that the research has provided. This report signifies the end of the two yearlong research into wholesale CBDC, Project Atom.

The announcement made earlier on Dec.8 by Josh Frydenberg, regarding the country’s plan to roll out its CBDC to the general public can be seen as precursor to bigger and better radical innovations to the country’s financial sector. According to local news outlet, The Australian, the Australian government has vetoed six, of the nine proposed reforms by its Senate committee.

The approved reforms include; the licensing mechanism for crypto exchanges, legislations to guide decentralized cryptoassets institutions, a unified access platform for old and new payments platforms. Of the three unapproved reforms, two were related to taxing and financial pliability had been forwarded  to the relevant governmental bodies for review, whilst the reform concerning tax discount for crypto miners has been discarded for now.

After the report was published, RBA’s assistant governor, Michele Bullock voiced his observation that the research project has unveiled a new ‘world’ to them, one which has shown how much potential the wholesale CBDC tokenization has, and is still yet to be explored. He stated that total integration offers better  risk management options, optimal efficiency and a state-of-the-art financial framework, completely innovating the country’s finance sector.

Project Atom was deployed on an Ethereum-leveraged Distributed Ledger Technology (DLT) protocol. It comes with a digitized and decentralized loaning system that utilizes wholesale CBDC tokens.

The publication reported that the DLT backed wholesale CBDC would marginally improve banking efficiency and eliminate ,either partially or completely, ideal banking operation risks.

According to the RBA, the research project wasn’t without it’s setbacks, as it stated that there were some issues that cropped up in the execution of the project. These were major concerns about the transaction privacy of the CBDC , the reliability of the decentralized networks and the fact that the DLT leveraged protocols aren’t originally designed to accommodate wholesale transactions.

Amidst preparations and planning for its digital assets deployment, for both wholesales and retail, the country is keen to pay attention to various security risks that are likely to occur.