Scaling of tokenised money on the horizon post Project Acacia: RBA’s Brad Jones
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The news: A new digital financial market infrastructure sandbox will be a focal point for the Reserve Bank post Project Acacia in a bid to move short-term pilot projects on tokenised finance to commercialisation, according to the RBA’s assistant governor Brad Jones.
The context: During a keynote speech at the Australian Payments Plus conference in Sydney, Jones said a financial system that was more dynamic and resilient to technological disruption is in the national interest but to achieve this it would take a “Team Australia” effort and require all stakeholders to approach things differently.
Jones said a lack of competitive tension, risk aversion and industry coordination failures had stymied dynamism in the development of tokenised finance in wholesale markets.
Pointing to Project Acacia — the joint initiative between the RBA and Digital Financial Cooperative Research Centre (DFCRC) — Jones said there was a need to move beyond short-term pilots and towards longer term, staged-gated environments to progress ideas to commercialisation and for regulators to learn about new technologies and safely adjust policy settings if needed.
Project Acacia explored how innovations in digital money and settlement infrastructure might support the development of Australian wholesale tokenised asset markets.
“[The] overarching takeaway from Acacia — stronger coordination across the private and public sectors is needed to ensure our markets are fit for the future,” Jones said.
“Tokenisation by itself is no silver bullet, but might instead be seen as one element of an enhanced payments and financial ecosystem that better serves the needs of the economy in the digital age.”
Jones said the RBA’s steps following Project Acacia include:
- Exploring how a new sandbox could better support responsible innovation in wholesale markets. This would involve testing and scaling of tokenised money, assets and new infrastructure in a longer term, stage-gated environment;
- Reviewing policies for accessing Exchange Settlement Accounts to support competition and innovation in payments;
- Stepping up work in cross-border payments including exploring with peer central banks on how new forms of money and settlement infrastructure could enhance wholesale cross-border payments;
- Partnering with Council of Financial Regulators (CFR) agencies and industry on other joint initiatives;
- Expanding the deposit token working group to develop solutions to support the interoperability of deposit tokens issued by different banks; and
- Convening an industry C-suite roundtable on the future of digital finance in Australia with CFR agencies.
What they said: “What I can confirm is that ensuring Australia’s payments, monetary and financial infrastructure arrangements are fit for purpose in the digital age is a strategic priority for the RBA and the Payments System Board,” Jones said.
“This is why we are committed to working with industry and fellow regulators to deepen our understanding of the issues presented by tokenised finance.”
The source: Australian Payments Plus conference
