According to executive overseeing the CBDC pilot, currently underway in Australia, central bank digital currencies (CBDCs) may not solve immediate problems, but they could be the answer to challenges that some are not even aware of yet.
Future problems can be solved
Dilip Rao, a former Ripple executive who now leads Australia’s CBDC research project, shared that a central bank-issued currency could be built for use cases not yet considered:
It may not solve a problem today, but it may solve a problem the day after tomorrow.
Question why individuals want to use CBDC not answered
Rao serves as director of the research program at the Digital Finance Cooperative Research Center, which is exploring use cases of a potential CBDC in conjunction with the Reserve Bank.
Nevertheless, Rao noted that the question of why individuals would want or need to use a CBDC is still unanswered.
One potential future application, Rao explained, could be large institutions trading tokenized assets on marketplaces preferring to use a CBDC to reduce risk.
Multiple possible use cases explored
The CBDC pilot is currently underway in Australia. It currently examines 14 possible use cases. It is noteworthy that a change in the law must be made in Australia before a CBDC could even be introduced.
For such changes to reach parliament, “politicians need to get on board.” Without the necessary politicians, there will be no change in the law, so that CBDCs in the country will have no chance of success. It is not yet known if and when a potential amendment to the law will be discussed. The first steps have been taken with the current pilot and we are still waiting for the results of this.