Australia’s central bank has realized a potential in establishing a wholesale digital currency that would make syndicated lending more efficient and less risky.

Concluding a year-long study, the Reserve Bank of Australia (RBA) said a tokenised form of central bank digital currency (CBDC) could be used by the wholesale market for the funding, settlement and repayment of a tokenised syndicated loan on an Ethereum-based distributed ledger technology (DLT) platform.

The project showed the platform could provide efficiency gains and reduce operational risk by replacing highly manual and paper-based processes.

An enterprise-grade DLT platform with appropriate controls on access and security could address many of the potential requirements for a wholesale CBDC system and tokenised assets platform, the RBA said.

The research project, which looked only at wholesale use of a digital currency, was run in conjunction with Commonwealth Bank of Australia, National Australia Bank, Perpetual and ConsenSys, with input from King & Wood Mallesons.

The Reserve Bank is still sceptical about a CBDC in the retail market, which the government will investigate next year.



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