The banking regulator, along with the Australian Treasury and DFCRC, will oversee the project to explore the potential economic benefits of introducing CBDC.
The Reserve Bank of Australia said that the initiative will also provide an opportunity to understand the technological, legal, and regulatory considerations of issuing such a currency.
CBDC project is expected to take a year to complete and during the period, a limited-scale CBDC pilot will be developed that will operate in a restricted environment.
Interested parties will be able to take part in the project to develop use cases on how digital currency could be used to provide payment and settlement services.
In the next few months, a paper will be published to explain the objectives and approach of the project.
The Reserve Bank deputy governor Michele Bullock said: “This project is an important next step in our research on CBDC. We are looking forward to engaging with a wide range of industry participants to better understand the potential benefits a CBDC could bring to Australia.”
DFCRC CEO Andreas Furche said: “CBDC is no longer a question of technological feasibility. The key research questions now are what economic benefits a CBDC could enable, and how it could be designed to maximise those benefits.”