Josh Frydenberg’s Restructuring Brings Relief To RBA

The Reserve Bank of Australia (RBA) just released a statement. The study followed the performance of wholesale central bank digital currencies for two years. In the research, distributed ledger technology was used to digitize and automate laborious paper-based banking procedures (DLT). In the wake of the study came Project Atom.

Project Atom Was A Collective Effort That Stretched Over Two Years

The investigation is the result of a partnership between the CBA, NAB, Perpetual, and ConsenSys, with additional input from another big player, King & Wood Mallesons. The research occurred over two years.

A board official at RBA believes the project is good for CBDC across the board and particularly suited for asset tokenization. This might likely increase efficiency, mitigate risk, and disrupt the Australian financial markets for good.

CBDC applications are either retail or wholesale. The latter is a central bank-issued digital currency that is useful for interbank transfers and financial institution wheeling and dealing.

Interesting Times For Australian Fintech And Digital Assets Regulations

Apart from revealing this reform and its implications, Josh Frydenberg also unveiled other alternatives that were recommended by the Senate Committee on encryption reform. These added solutions are presently being examined by the government for future applications.

The focus of the project centers on a form of CBDC token. This tokenized asset is then used in a syndicated debt market to attract wholesale investors. Earlier, the testing was carried out on the Ethereum blockchain.

From the report, it is clear that the application of DLT processes will increase productivity. However, it is left to CBDC across the board to jump on this incentive particularly to reduce operational risk.

Another reason for the success of the reform is that wholesale processes have been paper-based for a long time. Now, loan payments, servicing, settlements, and other valuable assets can be digitized.

Concerns About Efficiency And Transaction Privacy Still Linger

Stakeholders might experience privacy issues and efficiency lags while using the new digital infrastructure, particularly with blockchains that are not intended for wholesale use.

According to the POC, digital money was released to commercial banks by the RBA. The financial institution also granted access to sponsored investors to use the network.

The blueprint was fueled by the brilliant two-sided move for issuing and distributing CBDC. The Reserve bank went about this by issuing digital currency to commercial banks. Thereafter, they accepted investors from the wholesale pool who meet specific requirements to be part of the platform.

RBA Created The “Brainchild” CBDC In 2018

Top officials at RBA claim that CBDC materialized from careful and strategic planning for over three years — albeit downplaying its relevance. The roadmap of the digital project expanded to include digital currency just last year.

Studies will go on to discover new solutions to the project. It is believed the findings will optimize CBDC because the project is well-positioned to disrupt the continent’s payment mechanism.

There is another expectation that payments will now be more transparent. Likewise, data and auditing processes will become more accessible as a result of the digital switch.

CBDC will continue to be improved. This is because it is strategically positioned to disrupt the payment structure in the continent.