Australia’s Ambitious Journey Toward a Central Bank Digital Currency: Exploring the eAUD Pilot Project

An Overview of Australia’s CBDC Initiative

The Reserve Bank of Australia (RBA) is joining the digital revolution with plans to launch an in-house central bank digital currency (CBDC), affectionately dubbed eAUD. Through a white paper, the RBA laid out an exciting path towards piloting this futuristic currency.

The Collaboration Behind eAUD

On August 9, 2022, the RBA announced a partnership with the Digital Finance Cooperative Research Centre (DFCRC) to investigate potential use cases for the CBDC in Australia. The partnership ignited the launch of a project aimed at testing a general-purpose pilot for the eAUD. As quoted in the white paper, “The key objectives of the project are to identify and understand innovative business models, use cases, benefits, risks, and operational models for a CBDC in Australia.”

Timeline of the Pilot Project

The eagerly awaited report on the pilot project is anticipated in mid-2023, detailing the findings and insights learned throughout the pilot program.

• September 2022: Initial project discussions commence.
• Mid-2023: Release of the pilot project report.

Roles and Responsibilities in the Project

In this digital currency ballet, the RBA will take center stage as the issuer of the eAUD, while the DFCRC supports the development and integration of the digital currency platform. Industry players keen to join the action must first get approval to become use case providers for the pilot program.

Technological Foundations of eAUD

The white paper hints at a technologically savvy approach, suggesting a private, permissioned instance based on Ether (ETH). Each pilot participant will need to plan for their own expenses associated with the development and piloting, emphasizing the collaborative spirit of innovation.

The Regulatory Landscape

As Australia wades into the waters of CBDCs, it isn’t ignoring the surrounding regulatory environment. On September 6, 2022, the Ministerial department of Treasury reached out to the public, seeking opinions on taxing cryptocurrencies. Assistant Treasurer Stephen Jones hinted at a major change, proposing the exclusion of crypto assets from being taxed as a foreign currency.

A Call to Action for Investors

Investors were given a limited opportunity—a 25-day window—to voice their thoughts on the taxation issue before the deadline on September 30. Should the legislation pass, it would signify an important shift in how digital currency is approached fiscally in Australia.