At its recent meeting, the Payments System Board of the Reserve Bank of Australia discussed one positive and one negative update about the country’s digital asset technology projects. The call for participants in CBDC project pilot has received significant interest. At almost the same time, Australian Securities Exchange (ASX) cancelled its plans for its settlement system upgrade that utilized blockchain technology.
eAUD CBDC progress
Australian central bank announced the plans for an eAUD CBDC pilot in September this year. The whitepaper mentioned the following timeline for the project:
- Publish White Paper to describe the project and invite submissions Sep 2022
- Engage with industry participants on pilot CBDC design and usage Sep – Oct 2022
- Deadline for receipt of expressions of interest 31 Oct 2022
- Enable selected participants to test use cases on the CBDC platform Nov 2022
- Announce selected use cases for pilot CBDC Dec 2022
- Conduct CBDC pilot and operate selected use cases Jan – Apr 2023
- Shut down CBDC pilot platform Apr 2023
- Publish report with findings mid 2023
At the meeting on November 25th, the board discussed the progress and pointed to significant interest from industry in participating in the project. According to a press release, there was a large number of use case submissions received and now they are in the process of selecting use cases to take forward.
Some background info on eAUD pilot from the whitepaper:
RBC in collaboration with DFCRC (a national digital finance research program) the platform is based on Consensys Quorum (permissioned Ethereum) tools. They will also be responsible for APIs and Smart Contract development through which Use Case Providers access the platform. Use Case Providers, in their turn, will develop individual use case platforms, including KYC modules, end-user support and regulatory compliance. The project scope is limited to domestic use cases and all issued eAUD will be redeemed upon finalization. The main output is expected in the report with results and findings.
CHESS blockchain upgrade failure
Australian Securities Exchange (ASX) started working on the implementation of blockchain technology in its Clearing House Electronic Subregister System (CHESS) system upgrade back in 2017. At that time, they were among the first, together with Nasdaq, and the London Stock Exchange who started actively exploring the new technology.
ASX partnered with Digital Asset and even released some initial elements back in 2019. Following the independent review by Accenture they publicly announced the cancellation of the project.
“We have concluded that the path we were on will not meet ASX’s and the market’s high standards, there are significant technology, governance and delivery challenges that must be addressed,” said the announcement.
The main problems identified in the report were the latency and contention of the distributed design. There were also vague mentions of cooperation and project planning issues. The project cost the Australian budget $170 million.
Digital Asset also published a statement in their blog saying that they were “in alignment with findings from the report” specifically mentioning the highlighted need for replacement of ASX technical director.
The RBA’s reaction to ASX decision was stern: the members of the board discussed the serious shortcomings of ASX’s management of the project and started discussions with another regulator. Australian Securities and Investment Commission is about to issue a joint response to the matters highlighted in Accenture report.
We will observe developments on both projects.
