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Reserve Bank of Australia Shows Interest in Bitcoin and Blockchain Technology, Forms Research Group

Reserve Bank of Australia Shows Interest in Bitcoin and Blockchain Technology, Forms Research Group

Reserve Bank of Australia Shows Interest in Bitcoin and Blockchain Technology, Forms Research Group

​​The Reserve Bank of Australia (RBA), the country’s central bank, has announced the creaon of an internal research group focused on the development and tesng of bitcoin and its underlying technology the blockchain.

For years, Australian regulators have explored the potenal of blockchain technology in the convenonal finance industry. While doing so, local authories began to regulate bitcoin businesses and exchanges under an‐money laundering laws, providing a strict but clear regulatory framework for local digital currency companies.

As a result, the bitcoin industry of Australia started to grow at a relavely rapid rate. The demand for bitcoin amongst local investors and traders increased, as fully regulated bitcoin exchanges emerged and the regulatory conflict between lawmakers and bitcoin businesses dematerialized.

With the intent of maintaining the momentum of its local bitcoin and digital currency markets, RBA formed a research group dedicated in analyzing the use of bitcoin and blockchain technology in payments, clearing and selement.

In a statement, RBA stated:

“The Bank is parcipang in a working group of the Commiee on Payments and Market Infrastructures examining DLT and its implicaons. In February, the working group published an analycal framework for authories wishing to review and analyse the use of this technology for payments, clearing and selement.”

More importantly, in a research paper entled “Distributed ledger technology in payment, clearing and selement,” RBA noted that many of the world’s central banks are parcipang in the working group to analyze and evaluate the potenal of blockchain in the realm of finance.

Some of the members include the central bank of Belgium, brazil, Canada, France, India, Italy, South Korea, Mexico, Hong Kong, Netherlands, Russia and Switzerland.

While RBA reaffirmed that the group of banks are currently focusing on the development of blockchain‐based plaorms, which most likely are private blockchain plaorms built within a cloud network, its researchers are tasked to study the implicaons of bitcoin in the global economy.

Parcularly, RBA is interested in bitcoin’s ability to sele payments and clear transacons autonomously, in a secure yet transparent ecosystem. However, unlike several banks that have failed to observe security risks involved in centralized blockchain plaorms, RBA is well aware of the risks associated with permissioned ledgers. Thus, RBA in collaboraon with other central banks plan to test the potenal of blockchain technology with increased security measures and flexibility.

RBA’s research paper read:

“The use of DLT, however, does not come without risks. In most instances, the risks associated with payment, clearing and selement acvies are the same irrespecve of whether the acvity occurs on a single central ledger or a synchronised distributed ledger. That said, DLT may pose new or different risks, including:

(i) potenal uncertainty about operaonal and security issues arising from the technology;

(ii) the lack of interoperability with exisng processes and infrastructures;

(iii) ambiguity relang to selement finality;

(iv) quesons regarding the soundness of the legal underpinning for DLT implementaons;

(v) the absence of an effecve and robust governance framework; and

(vi) issues related to data integrity, immutability and privacy.”

Increased interest of banks and financial instuons toward bitcoin and blockchain technology will ulmately result in a significant growth of bitcoin and blockchain technology’s mainstream adopon.

Author : Joseph Young

Joseph Young is a finance and tech journalist based in Hong Kong. He has worked with leading media and news agencies in the technology and finance industries, offering exclusive content, interviews, insights and analysis of cryptocurrencies, innovative and futuristic technologies.

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