A central bank digital currency (CBDC) could provide efficiency gains and reduce operational risk for syndicated loans by replacing highly manual and paper-based processes, according to an Australian report issued on Wednesday.
The research project examined the potential use and implications of a wholesale CBDC using distributed ledger technology (DLT), also known as blockchain.
The project involved the development of a proof-of-concept for the issuance of a tokenised form of CBDC that could be used by wholesale market participants for the funding, settlement and repayment of a tokenised syndicated loan on an Ethereum-based DLT platform.
The research, known as Project Atom, explored how access to a CBDC could be extended to a wide range of wholesale market participants, including those that would not ordinarily have access to accounts at the Reserve Bank of Australia (RBA).
“Project Atom demonstrated the potential for a wholesale CBDC and asset tokenisation to improve efficiency, risk management and innovation in wholesale financial market transactions,” Michele Bullock, RBA assistant governor for the financial system, said.
Enterprise-Grade DLT Platform
It also examined the potential benefits of integrating a wholesale CBDC with tokenised assets on interoperable DLT platforms and whether an enterprise-grade DLT platform could be a viable technology.
The project’s co-researchers were the Reserve Bank of Australia, Commonwealth Bank, National Australia Bank, asset manager Perpetual, blockchain consultancy ConsenSys and China-Australia law firm King & Wood Mallesons.
“We believe the use of DLT will continue to grow and see it playing a significant role in Australia’s payments system in the years ahead,” Andrew Hinchliff, Commonwealth Bank group executive for institutional banking and markets, said.
Bullock said Australia’s central bank would continue its CBDC research “as part of its strategic focus area on supporting the evolution of payments”.
- George Russell