The Reserve Bank is collaborating with the Digital Finance Cooperative Research Centre (DFCRC) on a
research project to explore use cases for a central bank digital currency (CBDC) in Australia.

Considerable research has been undertaken by central banks, including the Reserve Bank, into the
feasibility and possible technical design of CBDC, in particular exploring the potential use of new
technologies such as distributed ledger technology. A question that has received less attention to date,
especially in countries like Australia that already have relatively modern and well-functioning payment
and settlement systems, is the use cases for a CBDC and the potential economic benefits of introducing
one.

The project with the DFCRC will help address this gap by focusing on innovative use cases and business
models that could be supported by the issuance of a CBDC. The project will also be an opportunity to
further understanding of some of the technological, legal and regulatory considerations associated with a
CBDC.

The project, which is expected to take about a year to complete, will involve the development of a
limited-scale CBDC pilot that will operate in a ring-fenced environment for a period of time and is
intended to involve a pilot CBDC that is a real claim on the Reserve Bank. Interested industry
participants will be invited to develop specific use cases that demonstrate how a CBDC could be used to
provide innovative and value-added payment and settlement services to households and businesses. The Bank
and the DFCRC will select a range of different use cases to participate in the pilot, based on their
potential to provide insights into the possible benefits of a CBDC. A report on the findings from the
project, including an assessment of the various use cases developed, will be published at the conclusion.
The findings will contribute to ongoing research into the desirability and feasibility of a CBDC in
Australia.

The Australian Treasury is participating as a member of the steering committee for the project, as part of
its joint work with the Reserve Bank on exploring the viability of a CBDC in Australia.

A paper will be published in the next few months that will explain the objectives and approach of the
project in more detail and how industry participants will be able to engage.

‘This project is an important next step in our research on CBDC. We are looking forward to engaging with a
wide range of industry participants to better understand the potential benefits a CBDC could bring to
Australia,’ said Michele Bullock, Deputy Governor of the Reserve Bank.

Dr Andreas Furche, CEO of the DFCRC, said ‘CBDC is no longer a question of technological feasibility. The
key research questions now are what economic benefits a CBDC could enable, and how it could be designed
to maximise those benefits.’

About the Digital Finance Cooperative Research Centre (DFCRC)

The DFCRC is a 10-year, $180 million research program funded by industry partners, universities and
the Australian Government, through the Cooperative Research Centres Program. The DFCRC’s mission is
to bring together stakeholders in the finance industry, academia and regulatory sectors to develop and
harness the opportunities arising from the next transformation of financial markets – the
digitisation of assets that can be traded and exchanged directly and in real-time on digital platforms.
The Reserve Bank is an industry partner of the DFCRC, and is using its involvement in the DFCRC to
support work on its strategic focus area on supporting the evolution of payments, including through
research on CBDC.