The central bank of Australia, The Reserve Bank of Australia (RBA), revealed in a statement on August 9 that it will work with the Digital Finance Cooperative Research Centre (DFCRC) on a year-long research project to examine the “innovative use cases and business models” of introducing a CBDC in Australia, as reported by Cryptoslate.
In the blog post, WEF restates the European Central Bank’s (ECB) definition of CBDCs, which identifies them as a kind of state-guaranteed, risk-free currency. It also predicts that by the middle of the decade, every European state will have its own digital version of the euro in circulation. The blog post goes on to clarify that CBDC is a secure asset since it lacks the dangers and volatility that come with cryptocurrencies. CBDCs can be kept by both private individuals and corporate entities at the central bank, as well as on mobile devices, prepaid cards, and other types of digital wallets as electronic tokens.
Cryptoslate stated that virtual money would then be promoted as a quicker, simpler, and more secure method of making daily payments. According to WEF, this makes CBDC an addition to actual cash rather than a substitute.
Regarding the advantages of CBDC for society as a whole, WEF noted that CBDC may reduce poverty and boost financial inclusion by facilitating safer and simpler access to money. In the event that cash is in short supply or becomes unavailable, it may also increase the resilience of financial systems since CBDC can act as a backup because it can be redeemed for domestic currencies. Finally, the possibility of adopting DLT to combat financial crime is also a motivator, as CBDCs can open the door to better AML/ KYC functionality and money flow transparency, Cryptoslate noted.
Currently, WEF is assisting central banks with the development, testing, and implementation of their DLT and CBDC adoption policies. It underlined the need to consider input from all sectors when making decisions about how to use the relatively new technology, as well as any potential threats it might pose.
(With insights from Cryptoslate)
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