US, Australia Make New Moves on CBDC

The United States and Australia have both announced new updates on their efforts towards assessing the feasibility of a central bank digital currency (CBDC). While the United States says it is planning to establish a new Treasury Department-led working group to deliberate on the possible launch of a digital dollar, the Reserve Bank of Australia on Thursday unveiled 14 firms who proposed various CBDC uses cases to be tested in its limited-scale CBDC pilot that “will take place over the coming months.”

Nellie Liang, the US Department of Treasury Undersecretary for Domestic Finance announced the planned launch of the new senior-level working group on Wednesday, noting that the group will comprise top executives from the Treasury Department, the Federal Reserve, the National Security Council and other government agencies. Group members will meet often 'in coming months' to trash out the benefits of a CBDC to the US economy, she noted.

In addition, the group will discuss how a digital dollar can help the United States to maintain its position as a leader in global finance, preserve its national security and ensure privacy while stopping the illicit flow. However, Liang emphasized that the Treasury and the Federal Reserve have not yet decided on the importance of a digital dollar.

The planned launch of the working group comes almost a year after President Joe Biden signed an executive order that mandates a number of federal agencies to study the risks and benefits of cryptocurrencies and the possibility of a digital order.

Australia Makes Progress with CBDC Pilot

In August last year, the Reserve Bank of Australia entered a partnership with the Digital Finance Cooperative Research Centre (DFCRC), a $180 million research programme funded by financial industry participants and other stakeholders, to explore use cases for CBDC. The government later invited interested industry participants to propose CBDC use cases for the project.

Following a submission from industry participants, the central bank on Thursday disclosed that it has selected 14 use cases to be included in the project. These include the usage of CBDC for offline payments, nature-based asset trading, corporate bond and tokenized foreign exchange settlement, CBDC custodial models and high-quality liquid assets securities trading, among others.

The selected firms include the Australia and New Zealand Banking Group Limited (ANZ), the Commonwealth Bank of Australia, facility and maintenance management firm Oban, the Australian Bond Exchange, and giant payment processor Mastercard. Others include Canvas Digital, electronic payment firm Digi Cash, custody services provider Fame Captial, and Unizon, among others.

CBDC Race Presses on in Europe

Meanwhile, in Europe, the race towards a digital euro is in progress. In November last year, 30 Spanish banks partnered to carry out new proof-of-concept trials to measure the impact of issuing a digital euro by the European Central Bank (ECB). The partnership is being organized in collaboration with a mobile payment solutions provider, Bizum, the payment service firm, Iberpay, which also oversees the Spanish interbank payments infrastructure, and Redsys, a payment system services provider.

Earlier in September, the ECB selected five companies including Amazon to participate in its digital euro payment prototyping exercise. The firms emerged from a pool of 54 payment providers that responded to the apex bank’s call for an expression of interest.