The Role of RITS in Supporting Settlement in a Tokenised Ecosystem Executive Summary

Tokenisation has the potential to enhance the efficiency, functionality and resilience of Australia’s wholesale financial markets. This consultation seeks stakeholder views on how the Reserve Bank of Australia’s (RBA) settlement services could support the development of tokenised finance in Australia. The consultation is one of the 11 initiatives identified in the Project Acacia Final Report to support the responsible development and scaling of tokenised markets in Australia.¹ It is also part of a larger strategic priority for the RBA aimed at shaping the future of money in Australia.

Project Acacia demonstrated that some of the benefits of tokenised finance could be realised through arrangements that synchronise tokenised platforms with the RBA’s existing central bank settlement services. These platforms supported tokenised assets, stablecoins and/or commercial bank deposit tokens. Project Acacia also highlighted industry interest in using central bank reserves to support stablecoin arrangements and identified potential future opportunities associated with tokenised central bank reserves.

As a risk-free settlement asset, central bank reserves enable interbank obligations to be settled with finality and without exposure to the credit risk of a private issuer. This is particularly important in systemically important financial markets, where participants need confidence that settlement will occur as expected, including during periods of stress. The RBA’s settlement services, comprising the Reserve Bank Information and Transfer System (RITS) and the Fast Settlement Service (FSS), enable financial institutions that maintain Exchange Settlement Accounts (ESAs) with the RBA to settle obligations with one another in central bank reserves through these accounts. By facilitating transfers of value in a common settlement asset, RITS and the FSS also support the ability of different forms of private money (i.e. deposits issued by different banks) to be exchanged at par value, underpinning the ‘singleness of money’. As tokenised assets, stablecoins and tokenised bank deposits begin to circulate, a key challenge for central banks will be preserving the role of central bank reserves in supporting settlement finality, mitigating settlement risk and maintaining the singleness of money, while continuing to foster innovation and efficiency in financial markets.

The primary focus of this consultation is on how existing services offered by the RBA could support tokenised finance use cases in the near term, including through synchronisation arrangements. It also seeks views on potential longer-term capabilities and the role that tokenised central bank reserves might play in the financial system of the future. It seeks input on use cases that may emerge, the settlement arrangements they may require, and how the RBA’s settlement services may need to evolve as tokenised markets scale and mature. The RBA is interested in the technical design considerations associated with these arrangements, and the broader implications for settlement operations, liquidity management and financial stability. The consultation seeks views in four broad areas:

• Synchronisation with existing central bank settlement services to support delivery-versus-payment (DvP) settlement of tokenised asset transactions. The consultation considers how RITS and the FSS could support settlement of transactions in tokenised wholesale assets. It explores different approaches to synchronising settlement in central bank reserves with actions occurring on tokenised platforms. These include alternative models for achieving DvP, the role of synchronisation providers, options for interfacing with RITS and the FSS, and the messaging, connectivity, information and notification capabilities required to support these arrangements. The consultation seeks views on the extent to which existing settlement services and supporting infrastructure can accommodate anticipated use cases and where enhancements may be required to support near-term implementation and the scaling and efficiency of tokenised wholesale asset markets as they mature.
• Exchange between tokenised private money issued by different institutions using existing central bank settlement services. The consultation considers how RITS and the FSS could support at-par exchange of tokenised private money issued by different institutions, as well as exchange between traditional bank accounts and tokenised private money. It explores alternative exchange models, including mechanisms for synchronising transfers of tokenised private money with settlement in central bank reserves. The consultation seeks views on the operational, messaging and connectivity requirements for these arrangements, and whether enhancements to existing settlement services may be required to support both implementation and adoption and use at scale.
• The role of potential access to central bank reserves in stablecoin arrangements. The consultation explores how stablecoin issuers might use central bank reserves if access were made available in the future, including for holding backing reserves, liquidity management, issuance and redemption activities, and exchange with other forms of money. It also seeks feedback on the account structures, access models and operational arrangements that could support these use cases in a manner consistent with financial system stability and the safe operation of the payments system.
• Key high-level design considerations relating to tokenised central bank reserves. The consultation seeks views on the use cases that may benefit from the circulation of tokenised central bank reserves, the outcomes stakeholders consider most important, and some of the high-level design considerations associated with issuance, distribution, interoperability, funding, liquidity management and interaction with existing central bank settlement services.

The insights from this consultation will inform the RBA’s future policy development and consideration of how RITS can support the needs of an evolving financial system. Rather than proposing a preferred model, the consultation seeks evidence on emerging use cases, requirements and design choices to help shape the next generation of Australia’s settlement services. In considering how its settlement services may evolve, the RBA is guided by its objectives for safety, efficiency, resilience and financial stability, and is interested in understanding the trade-offs that may arise between innovation, interoperability, liquidity efficiency, operational complexity and risk management. By bringing together perspectives from across industry, the consultation aims to support the development of tokenised finance while preserving the confidence and stability that underpin Australia’s financial system.