RBA taps bank partners for crypto Australian dollar project

Digital Australian dollar research steps up to the next level with major banks collaborating on a wholesale Etherium solution.

| More on:
A hand reaching into a computer to grab digital money, indicating a rise in the use of cryptocurrency

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Reserve Bank of Australia has stepped up its research into a cryptocurrency version of the Australian dollar, announcing a collaboration with 3 major ASX-listed companies on Monday morning.

Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB) and Perpetual Limited (ASX: PPT) will partner with the RBA on the Wholesale Central Bank Digital Currency Research Project.

The program will explore the use of central bank digital currency (CBDC) for transactions between financial institutions.

US software firm ConsenSys will also be involved, lending its expertise on Ethereum-based blockchain technology.

The Motley Fool has contacted CBA, NAB and Perpetual for comment.

What does the RBA want to get out of this?

The end result of the project will be a proof-of-concept in using cryptocurrency in the wholesale market for "the funding, settlement and repayment of a tokenised syndicated loan".

"With this project, we are aiming to explore the implications of a CBDC for efficiency, risk management and innovation in wholesale financial market transactions," said RBA assistant governor Michele Bullock.

"While the case for the use of a CBDC in these markets remains an open question, we are pleased to be collaborating with industry partners to explore if there is a future role for a wholesale CBDC in the Australian payments system."

The project should be completed by the end of the year, with a report published in the first half of 2021.

A crypto-dollar has been years in the making

RBA has toyed with the idea of a digital version of the Australian dollar for several years.

In 2017, a group of Australian fintech startups secretly approached the central bank with the concept.

FlashFX was the first local startup granted a financial services licence to transfer money internationally using distributed ledgers, also known as blockchain technology.

"A government-endorsed digital Australian dollar has the potential to lead to increased trust and certainty, particularly to grow the digital currency marketplace," FlashFX chief enabling officer Nicolas Steiger said in 2017.

"It would also stop multiple private parties creating a confusing array of 'Australian dollars' with no official backing."

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Oil industry worker climbing up metal construction and smiling.
Energy Shares

ASX 200 energy shares lead the market as US trade deals fuel optimism

ASX energy shares lifted 3.94% as more US trade deals led to improved market sentiment.

Read more »

A female ASX investor looks through a magnifying glass that enlarges her eye and holds her hand to her face with her mouth open as if looking at something of great interest or surprise.
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

A smiling businessman in the city looks at his phone and punches the air in celebration of good news.
Broker Notes

These ASX 200 shares could rise 50% to 60%

Brokers believe these shares could deliver big returns for investors.

Read more »

A girl is handed an oversized ice cream cone with lots of different flavours.
Best Shares

8 ASX All Ords shares that tripled in value in FY25

Just 8 out of the 500 companies making up the ASX All Ords achieved share price growth of 200% or…

Read more »

Broker written in white with a man drawing a yellow underline.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

Woman with a scared look has hands on her face.
Broker Notes

Bapcor shares fell more than 30% yesterday. Should investors buy in the dip?

Is this a value opportunity?

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Broker Notes

Broker raises price targets on 2 ASX 200 shares to buy

Ord Minnett has just upped its 12-month share price targets on 2 buy-rated ASX 200 stocks.

Read more »

Man with rocket wings which have flames coming out of them.
Share Gainers

Guess which ASX All Ords stock just rocketed 34% on strong earnings growth

Investors just sent this ASX All Ords stock surging 34%. Here’s what’s happening.

Read more »