The Reserve Bank has given qualified support for the introduction of a central bank digital currency in Australia, following completion of a pilot involving numerous CBDC use cases earlier this year. The RBA and the Digital Finance Cooperative Research Centre worked together on the project, and yesterday released a report on the pilot, saying “a CBDC has the potential to support increased efficiency and resilience in some areas of the payments system, though more research is required”. The pilot involved the use of eAUD, a general purpose CBDC issued as a liability of the Reserve Bank. It was denominated in Australian dollars and the smallest denomination was one cent. eAUD was issued as a digital token on an Ethereum-based distributed ledger platform, where the holder was able to directly control the pilot CBDC without relying on an intermediary. Some of the pilot use cases included the use of smart contracts, where holders could program the way the CBDC was used, such as stipulating conditions required before a payment was made. The program included offline payments, tokenised foreign exchange settlements, custody, Web3 commerce, tokenised bills, corporate bond settlements, livestock auctions and automation of goods and services tax lodgement. Among the participants, ANZ worked with Grollo Carbon Ventures to trade Australian Carbon Credit Units. ANZ tokenised ACCUs and issued stablecoin, allowing GCV to purchase tokenised ACCUs with settlement occurring via a smart contract. Commonwealth Bank worked with Intuit on the collection and payment of GST using automated programmable payments. Canvas Digital arranged a transfer of eAUD into USDC stablecoin. The trade, involving DigitalX and fund manager TAF Capital was settled instantly, “demonstrating one of the benefits of a CBDC – real-time 24/7 international remittance”. Payment company Monoova demonstrated a cross-border settlement working with one of its existing foreign exchange clients, NexPay, a specialist provider of inbound remittance services for foreign students studying in Australia. A payment to NexPay from a client in Japan was settled by Monoova to NexPay’s pilot CBDC wallet.  Other participants included Mastercard, Cuscal, Australian Bond Exchange, digi.cash, Unizon and Imperium Markets. The RBA and CFCRC report said: “The use cases examined in the project suggested that broad access to a CBDC could support the creation of new or more efficient markets. Supply chain and business processes could also be enhanced. “At the same time, the project raised a number of questions and revealed various legal, regulatory, technical and operational issues that warrant further consideration as part of further research on CBDC in Australia.” On the regulatory issues, the report said: “The process of assessing the regulatory status of the piloted use cases highlighted uncertainties relating to how CBDC and new business models utilising it could fit into current legal and regulatory frameworks. Some uncertainties related to the bespoke nature of the pilot CBDC.” The pilot was not designed to evaluate the technology that would be best suited to implement a CBDC. The report recommended further research on technology issues, such as the use of smart contracts and private versus transparent transaction models. None of the pilot program case studies involved retail payments. The