The Reserve Bank of Australia said Monday it is partnering with the Commonwealth Bank of Australia (CMWAY), National Australia Bank Limited (NABZY), and financial services firm Perpetual to explore the “implications” of a wholesale form of a blockchain-based central bank digital currency (CBDC).

What Happened: Australia’s central bank said in a statement it would research the development of a proof-of-concept for the issuance of a tokenized form of the CBDC “that can be used by wholesale market participants for the funding, settlement and repayment of a [tokenized] syndicated loan on an Ethereum-based [distributed ledger technology] platform.”

“With this project, we are aiming to explore the implications of a CBDC for efficiency, risk management, and innovation in wholesale financial market transactions,” said Reserve Bank of Australia Assistant Governor Michele Bullock.

The project is slated to be completed by the end of this year and a report on the main findings can be expected by the first half of 2021.

Why It Matters: China has been spearheading the development of a CBDC, with domestic technology giants such as Tencent Holdings Ltd (TCEHY) and Alibaba Group Holdings Ltd (BABA) reportedly serving as outlets for the currency.

In April, it was reported that U.S. fast-food companies such as McDonald’s Corporation (MCD) and Starbucks Corporation (SBUX) as well as Subway could participate in the trial of the digital Renminbi. 

Central banks Japan, Canada, and some European Union countries are teaming up to study the prospects of launching digital currencies in their respective countries.

In October last year, Facebook Inc (FB) CEO Mark Zuckerberg warned the United States lawmakers on their stance on digital assets that "we can't sit here and assume that because America is today the leader that it will always get to be the leader if we don't innovate,” National Public Radio reported.