Australia's central bank to form 'limited-scale' digital currency pilot

The Reserve Bank of Australia in partnership with the Digital Finance Cooperative Research Centre is expecting to form a pilot study to explore use cases and business models for a retail central bank digital currency in the country. CBDC's are digital forms of government-backed fiat currency that are made available to the public. "The project, which is expected to take about a year to complete, will involve the development of a limited-scale CBDC pilot that will operate in a ring-fenced environment for a period of time and is intended to involve a pilot CBDC that is a real claim on the Reserve Bank," the central bank said in a release Tuesday. Interested participants will be invited to develop particular use cases that explain how a digital currency could be used to enable value-added payment and settlement services to households and businesses, the release said. Over the next few months, the RBA said it will publish a paper that will demonstrate "the objectives and approach of the project in more detail and how industry participants will be able to engage." The news comes just days after Thailand's central bank said it's planning to extend its development of a retail CBDC by initiating a pilot study by the end of this year. Meanwhile, a slew of developed nations are exploring the risks and benefits of a CBDC, including the U.S., China and the U.K.In mid-June, Federal Reserve Chair Jerome Powell said a U.S. CBDC could preserve U.S. dollar's strength.