The Reserve Bank made its clearest statement to date yesterday that if Australia does end up developing a central bank digital currency it will not be used for retail payments. Speaking at the Financial Review Business Summit, RBA governor Philip Lowe said a CBDC might have useful applications in overcoming “frictions” in payments, and those frictions are in wholesale payments. Lowe said: “We have a very efficient retail payments system that is free and operates in real time. You can make a payment to someone’s mobile phone number. How can we do better than that? “Maybe a digital currency would be useful for retail payments but we don’t think the case is there.” The RBA and the Digital Finance Cooperative Research Centre launched a CBDC pilot last year and last week announced that 14 use cases they have chosen for the pilot.  Financial institutions chosen to participate in the trial include ANZ, Commonwealth Bank, Mastercard, Cuscal, Monoova, Australian Bonds Exchange, Canvas Digital, digi.cash, Fame Capital, Unizon and Imperium Markets. Their projects cover offline payments, tokenised foreign exchange settlement, custody, Web3 commerce, tokenised bills, corporate bond settlements, livestock auctions and automation of goods and services tax lodgement. All but a couple deal with business and institutional payments. The international experience with CBDC’s is largely, but not exclusively, focused on wholesale applications. Earlier this week, the Bank for International Settlements reported on Project Icebreaker, a CBDC pilot involving cross-border payments. Participants included Bank of Israel, Norway’s central bank Norges Bank and Sweden’s central bank Sveriges Riksbank. The RBA has been involved in a similar trial, Project Dunbar, where it worked with Bank Negara Malaysia, the Monetary Authority of Singapore and the South African Reserve Bank to trial a shared platform to complete international settlements using multiple central bank digital currencies. Unlike domestic payments, where banks can pay each other directly on a single national payments platform, there is currently no single international platform for cross-border payments and settlements. The view of the Project Dunbar participants was that this model is fragmented, slow, opaque and expensive, compared with domestic payments. The RBA was positive about the outcomes of the trial, saying: “Project Dunbar proved that financial institutions could use CBDCs issued by participating central banks to transact directly with each other on a shared platform. This has the potential to reduce reliance on intermediaries and, correspondingly, the costs and time taken to process cross-border payments.” But not all CBDC initiatives are about wholesale and cross-border payments. A recent McKinsey & Co report, What is Central Bank Digital Currency?, includes details of a Chinese pilot e-CNY, which allows banks to offer digital currency accounts for customers. Also discussed was DCash, an initiative of the Organisation of Eastern Caribbean States, which includes Antigua and Barbuda, Dominica, Grenada, St Kitts and Nevis, St Lucia and Montserrat. With DCash, consumers hold deposit accounts with the central bank. Jamaica launched JAM-DEX in June last year. It is the first CBDC to be formally declared legal tender. Common themes in these retail CBDCs are that they are in countries where there are issues with financial