Australia’s CBDC to be tested by Mastercard and others

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The Reserve Bank of Australia has disclosed a number of initiatives that will create use cases for the eAUD, a digital Australian dollar, while it is in testing. By the middle of 2023, the pilot is expected to be finished.

The Reserve Bank of Australia (RBA) has started working on its digital currency and is actively testing it. The Australian central bank revealed that the initiatives will examine use cases including offline payments, bond settlement, and securities trading, among others. The participants in the pilot projects include a wide array of industry representatives, from “smaller fintechs to large financial institutions”.
Given its customer base, Mastercard’s CBDC effort is deemed oppportune. Together with Mastercard, the RBA has collaborated with ANZ, Monoova, the Australian Bond Exchange, DigiCash, Commonwealth Bank, and other institutions. Furthermore, the potential for competition between CBDCs and decentralised digital currencies like Bitcoin and stablecoins is highlighted by The Reserve Bank of Australia’s alliance with significant financial organisations like Mastercard and ANZ. Governments all around the world seem to be preparing CBDCs to replace rather than coexist with the personal financial freedoms provided by cryptocurrencies.

At least 105 countries, representing more than 95% of global GDP, are considering a CBDC, according to the Atlantic Council, a website that monitors the implementation of CBDC around the world. Compared to the meagre 35 nations that were announced in May 2020, this is noticeably different. In October 2020, the Sand Dollar was introduced by the Central Bank of the Bahamas, making it the first national CBDC in history. Nigeria, which has the largest economy in Africa, was the first nation in the continent to establish a CBDC in October 2021. The eNaira is kept in a digital wallet and can be transferred and used for contactless in-store payments. Almost 700,000 people have downloaded the eNaira wallet by the end of January 2021. In April 2020, China, the largest economy in Asia, became the first developed nation to test a digital currency. The e-CNY, or digital yuan, is intended for widespread domestic use, according to the People’s Bank of China.

Related Article: China’s CBDC now has a smart-contract

a presentation of wide adoption of CBDC showing countries that are working on it infront of a building that seems to be a central bank
Central Bank Digital Currencies are a form of digital currency that is issued by a country’s central bank. photo credits: PIM

It has been speculated that the bear market and ambiguous laws were taking away Visa and Mastercard’s acceptance of cryptocurrencies. The leaders in digital payments have been quick to shun those rumours with latest developments in the crypto space. In collaboration with Mastercard, the top Latin American cryptocurrency exchange Bitso has launched a new debit card. The exchange enabled the card in November for a select set of clients to gather feedback before launching a progressive rollout for over 100,000 consumers who had requested the card in Mexico. Bitso now joins the list of Latin American cryptocurrency firms that Mastercard has partnered with, which also includes Binance, Belo, and Buenbit. In spite of news reports hinting otherwise amid a brutal bear market, Visa is not slowing down its cryptocurrency plans.

What are CBDCs?
A Central Bank Digital Currency, or CBDC, is a type of virtual currency that resembles cryptocurrencies but is issued and governed by a central bank. This digital money is released as a token or with an electronic record linked to it and tethered to the national currency of the region or nation that issued it. The potential of Central Bank Digital Currencies (CBDCs) to enable secure and effective payments in the digital era is being investigated by central banks all over the world. The International Monetary Fund (IMF) asserts that centralised technologies like CBDCs can lower costs, promote smooth money flow, increase financial inclusion, and offer more secure access to money through digital paths.
CBDC runs on a centralised, permissioned network, which is a key distinction between it and cryptocurrency. With the assistance of additional outside entities, a central bank supervises and enables the transactions associated with CBDCs.

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