Wholesale Central Bank Digital Currency Project Acacia In Brief
Project Acacia has explored how digital money and associated settlement infrastructure could enhance the functioning of Australia’s wholesale asset markets through the development of tokenised finance. The project provided learnings relating to the potential benefits of asset tokenisation, the roles of different forms of digital money, industry co-ordination challenges, and a range of legal and regulatory issues associated with innovation in Australia’s financial system.
The initiative has been led by the Reserve Bank of Australia (RBA) and the Digital Finance Cooperative Research Centre (DFCRC), in collaboration with a broad range of industry participants, and supported by the Australian Securities and Investments Commission (ASIC), the Australian Prudential Regulation Authority (APRA) and the Australian Treasury.
The project reflected the RBA’s strategic priority on shaping the future of money in Australia.
Transcript
I'm pleased to announce that today the Reserve Bank, in partnership with the Digital Finance CRC, published the findings of Project Acacia. This was our experimental research initiative into how the tokenisation of assets and money could help uplift the functioning of Australia's wholesale financial markets. I want to share the key messages from this work, which also benefited from the active engagement of industry alongside APRA, ASIC and The Treasury.
What Project Acacia showed us was that there is significant and growing industry interest in tokenisation. What really got the attention of industry and regulators was the potential for tokenised markets to make issuance, trading and settlement more efficient, to enhance the ability of assets to move around our financial system, potential improvements for issuers and investors to access liquidity, and to enjoy reductions in settlement risk.
At the same time, the project also identified some areas where further work by industry and regulators is required, including in addressing some of the challenges to scaling tokenised asset markets and new forms of money. Extending and expanding the engagement between industry and the public sector is going to be critical to unleashing greater dynamism and resilience in Australia's financial economy.
That was really a key learning from Acacia, and what we're striving for here is to ensure that our wholesale financial markets remain efficient, resilient and attractive to issuers and investors far into the future. And so to that end, the Reserve Bank, the Digital Finance CRC and our partner Council of Financial Regulator agencies will build on the momentum generated by Project Acacia by embarking on a new suite of initiatives.
A focus will be on addressing some of the coordination challenges that have stymied responsible innovation in the past and to explore better pathways for industry to safely experiment and then scale new innovations in tokenised finance.
We view these as important steps toward ensuring Australia's financial system is fit for the future and we'd like to thank all our industry partners in Project Acacia for being part of the journey so far. Thank you.
What really got the attention of industry and regulators was the potential for tokenised markets to make issuance, trading and settlement more efficient, to enhance the ability of assets to move around our financial system. – Brad Jones
Types of Tokenised Assets Explored by Industry Participants in Project Acacia
Our conclusions
Asset tokenisation in Australia
There is strong interest for the tokenisation of assets to improve the efficiency, resiliency and functionality of important financial markets. Realising the potential benefits across the asset lifecycle – from issuance and servicing to trading and settlement – will require a coordinated effort across industry and the public sector.
Forms of money to facilitate tokenised wholesale markets
Interoperable private tokenised money (stablecoins or tokenised commercial bank deposits) can support asset tokenisation. However, central bank money will continue to have a foundational role in the financial system of the future. Continued exploration of wholesale CBDC is warranted, but many of the benefits of tokenisation can be realised using existing central bank money in the form of ESA balances.
Legal and regulatory considerations
Further collaboration between industry, regulators and Government is needed achieve the desired legal and regulatory state for a tokenised ecosystem. Longer-term regulatory and/or innovation sandboxes could better support the experimentation pathways required for tokenised markets to scale.
Future workstreams
Regulatory workstream
- Inter-agency Regulator Working Group
- Explore a digital financial market infrastructure (DFMI) sandbox
- Explore tokenised government bond initiative
- C-suite roundtable on the future of tokenised finance in Australia
Industry workstream
- Joint Regulator-Industry Tokenisation Advisory Group
- Extension of the Deposit Token Working Group
- Other industry work groups (as required)
RBA workstream
- Industry consultation on tokenised money and RITS settlement infrastructure
- Review of ESA policy
- Further applied research on wCBDC
- Exploration of how innovations in digital money and associated infrastructure could enhance wholesale cross-border payments
Related information
Media Release
Read our media release announcing the publication of the Final Report and its key findings.
Wholesale CBDC
Explore the research and the documents published relating to wCBDC.
Summary of Use Cases
Read the use cases explored by industry participants in Project Acacia.
After Acacia – Speech by Brad Jones
Listen to Brad talking about early insights and next steps from the RBA’s tokenised assets project.
DFCRC Website
Visit the website for information about DFCRC and its role in digital finance.