- The Reserve Bank of Australia is ramping up its CBDC initiative with Hedera.
- The central bank opted for the wholesale version of CBDC as the public had no interest in its retail version.
Australia has been exploring the prospect of launching a Central Bank Digital Currency (CBDC) over the past couple of years. Talks about it are gaining significant traction again, as Hedera (HBAR) is reportedly pumping more gas to advance the initiative.
Hedera and RBA Partnership for a CBDC
Citing Altcoin Buzz, Bitget claimed that Hedera is still actively involved in the Reserve Bank of Australia’s (RBA) CBDC project. Details about the development are scarce at the moment, but the two have allegedly reaffirmed their agreement to advance Project Acacia, the central bank’s experimental payment infrastructure using tokenized assets.
RBA confirmed Hedera’s role in Project Acacia last year. The central bank chose the chain for the issuance and testing of its pilot wholesale CBDC (wCBDC). Other participants in the initiative include Redbelly Network, R3 Corda, Canvas Connect, and other unnamed EVM-compatible networks.
Project Acacia consisted of 19 pilot use cases centered on real-money and real-asset transactions. Additionally, it delved into five proof-of-concept use cases for simulated transactions.
The digital assets that the RBA was experimenting with included stablecoins, tokenized deposits, and wCBDC. The central bank notably opted to focus on the wholesale version of its planned CBDC as it saw “no clear public interest” in issuing a retail version of the virtual asset.
Retail Vs Wholesale CBDCs
According to the RBA, Australia’s retail payments system meets global standards in terms of efficiency, security, and innovation. Hence, it does not need a retail CBDC that would complement or replace the Australian dollar. This also comes amid the public’s strong opposition to the central bank’s potential increase in surveillance and control measures over how people use their money.
By zeroing in on the wholesale version of CBDC, RBA aims to modernize the plumbing of the financial system without introducing the political and social friction associated with its retail version. Banks and financial institutions strongly favor a wCBDC because it provides atomic settlement and near-instantaneous transaction finality by eliminating intermediaries.
The near-real-time, immutable settlements, coupled with the deep liquidity and programmability inherent in Hedera’s Hashgraph technology, lead to significant cost reductions and the mitigation of counterparty risk compared to traditional rails.
Hedera’s Hashgraph technology, featuring high throughput and an Asynchronous Byzantine Fault Tolerance (ABFT) consensus protocol for a high level of security, aligns with the RBA’s vision for a resilient, institutional-grade infrastructure for CBDCs.
