Australian central bank to launch ‘live pilot’ of CBDC in coming months

Australia

The use cases for the CBDC ranged from offline payments to "trusted Web3 commerce" and financial industry participants were invited to undertake a live pilot.

Australia's central bank is set to launch a "live pilot" of a Central Bank Digital Currency (CBDC) "in the coming months," according to a joint statement from the Reserve Bank of Australia (RBA) and Digital Finance CRC (DFCRC), an Australian financial research institute.

The RBA said on Mar. 2 local time said it was collaborating with the DFCRC on a research project to "explore potential use cases and economic benefits of a central bank digital currency (CBDC) in Australia."

The RBA announced the initial stage of the research project involved the selection of several financial industry participants to demonstrate potential use cases of the CBDC, which will provide possible benefits of a CBDC.

This will involve a"live pilot," which the RBA says will take place over the coming months.

Use cases being piloted will include offline payments, tax automation and a CBDC for "trusted Web3 commerce," while participants of the trial range from banks, such as Commonwealth Bank and Australia and New Zealand (ANZ) bank to payment providers such as Mastercard.

*Selected CBDC use cases and the providers of each. Source: RBA*

Brad Jones, Assistant Governor (Financial System) at the RBA said, "The pilot and broader research study that will be conducted in parallel will serve two ends – it will contribute to hands-on learning by industry, and it will add to policy makers’ understanding of how a CBDC could potentially benefit the Australian financial system and economy.”

This is a developing story, and further information will be added as it becomes available.

Former Chinese central banker says digital yuan ‘usage has been low’

Adoption

A former China central banker said cumulative e-CNY transactions only crossed $14 billion in two years, adding the results were “not ideal.”

A former official of the People’s Bank of China (PBOC), the country’s central bank, has expressed disappointment that China’s digital yuan is seeing little use.

Xie Ping, a former PBOC research director and current finance professor at Tsinghua University, made critical public comments about China’s central bank digital currency (CBDC) at a recent university conference, according to a Dec. 28 Caixin report.

Xie noted that cumulative digital yuan transactions had only crossed $14 billion (100 billion yuan) in October, two years after launch. “The results are not ideal,” he said, adding that “usage has been low, highly inactive.”

Despite the government’s rapid expansion of the trials and new wallet features to try to attract users, a January PBOC report stated that only 261 million users had set up an e-CNY wallet.

This compares to around 903.6 million people that utilize mobile payments in China, according to a 2021 China UnionPay report.

The former central banker said the use case of e-CNY “needs to be changed” from its current use as a cash substitute and opened to other uses such as the ability to pay for financial products or connected to more payment platforms to boost adoption.

He compared the digital yuan to other third-party payment systems in the country such as WeChat Pay, Alipay, and QQ Wallet, which allow for investments, lending or loans. He said they “have formed a payment market structure that has met needs for daily consumption.”

Some third-party financial apps are e-CNY compatible but see little use, as Xie said “people are used to” using the original service and change “is difficult.”

Such criticism of Chinese government initiatives is rare from former officials and signals the country may be seriously struggling to gain traction on its CBDC initiative.

The government has rapidly expanded e-CNY trails most recently in December to four new cities. It was previously expanded in September to Guangdong province, its most populous, and three others.

New features were added to the e-CNY wallet app in a bid to attract users in time for Chinese New Year that added functionality to send digital versions of traditional red packets or red envelopes (hongbao) containing money — a popular custom during festivities.

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