China’s rapid-fire progress with its digital yuan CBDC, spurred rival nations into action. However, it turns out that some of them – like Banque de France – have been carrying out research projects or even CBDC pilots for months. Now, the latest to join this group was Australia.
Aussie CBDC under the microscope
Australia’s CBDC research project, named Project Atom, claimed a “successful conclusion” in a report by The Reserve Bank of Australia, Commonwealth Bank, National Australia Bank, Perpetual, ConsenSys, and King & Wood Mallesons.
According to the report, Project Atom is a CBDC using distributed ledger technology [DLT] and is based on Ethereum. Furthermore, spanning between 2020 and 2021, the project studied funding, settlement, and tokenized syndicated loan repayment use cases.
Coming to a range of eligible CBDC users, the report noted,
“The POC [proof-of-concept] explored a two-tier model for the issuance and distribution of the wholesale CBDC whereby the RBA would issue CBDC to commercial banks, and then banks could make the CBDC available to eligible wholesale market participants that they sponsor onto the platform.”
The report further revealed that past CBDC experiments took place in 2018. This was also on Ethereum.
It’s also important to remember that Australia is a member of the Bank for International Settlements Innovation Hub’s Project Dunbar, which is working on prototypes for international payments using multiple CBDCs.
Analyze this, Australia
“The POC was not developed with high throughput and scalability as key requirements and so this aspect has not been a focus of the testing. However, demonstrations suggest that the system processes most transactions in about 10–15 seconds.”
Many might naturally be concerned about privacy. To that end, the research report introduced the privacy protocol ‘Aztec’ which is meant to encrypt transactions. However, the report noted that this feature greatly slowed down the transaction time.
What’s more, the CBDC also used a consensus mechanism called “proof of authority” which makes special validator nodes responsible for verifying transactions.
Now shake it all up
News of Project Atom came soon after Australia’s Treasurer Josh Frydenberg announced new regulations for the payment systems – crypto included – that would “shake up” the sector.