Australia trials central bank cryptocurrencies offline

 

Australia

trials central bank cryptocurrencies offline

Australia's attempt to launch the Central Bank's digital currency (CBDC) has reached a milestone after successfully completing the pilot test of offline payment functions.

The pilot project, led by the Australian and New Zealand Banking Group (ANZ), involved selected students and vendors from the University of Southern Cross.

According to the details

The eight-week pilot program recorded successes in

offline transaction resolution.

Ten students received smart cards supporting eAUD-loaded NFC technology, which were programmed to be spent at on-campus designated merchants.

Initial reports from selected traders on the study had yielded positive responses, but critics were still unsure that the function could be applied in other scenarios.

In 2022, students and residents of the region were unable to access financial services due to the severe flooding that affected energy supplies.

The central bank is expected to

weigh more on a similar pilot project with more participants.

"The objective of the pilot programme is to demonstrate how an organization such as the University can intervene and provide immediate financial support through the exchange of digital currencies for central banks in emergencies

such as floods

where students do not have access to online funds or traditional baking services."

University Director of

Financial Services Richard Jones said

Despite all its successes, analysts say it is highly unlikely that offline central bank cryptocurrencies will receive significant attraction due to residents' reluctance

to keep central bank cryptocurrencies in cards that support

NFC technology in case of an emergency.

One way to overcome this challenge is for the government to distribute digital currencies to offline central banks to residents who do not have access to the Internet as a repayable loan or as grants to mitigate the effects of natural disasters.

"The main thing I've noticed is reliability because it works offline.

Tim Gurder, a pilot program participant

said:

It is not prone to network errors that other

card systems face problem with.

The Reserve Bank of Australia (RBA) has been experimenting with cryptocurrencies for central banks since 2022, but despite initial successes, the banking regulator says the cryptocurrency solution for central banks is still "several years away."

In a recent report

the RBA says the central bank's digital currency can provide greater financial inclusion, innovation of private digital funds and interoperability between systems

and cross-border payment functions.

Explore offline payments

Many central banks have begun preliminary studies related to offline payments, but the research has been marred by the absence of global technical standards.

Under the theory proposed by the Bank of Canada

 entering into offline cryptocurrency payments to central banks could involve

the use of a "premium ecosystem powered by dedicated devices".

The People's Bank of China (PBoC)

and the Central Bank of Russia have listed offline payment functionality as possible ways to make the Central Bank's digital currency (CBDC) compete with local payment alternatives.

Other central banks are proceeding with contactless payments, securities posting, and cross-border transactions as new functions for proposed central banks' digital currencies.