Reserve Bank of Australia Launches Research Project Exploring Digital Money

Australia’s central bank is accelerating its digital finance strategy, announcing that Project Acacia—its flagship initiative focused on wholesale tokenized asset markets—is entering a new phase of real-world testing.

The Reserve Bank of Australia (RBA) revealed on Thursday that the project will now trial 24 distinct use cases, engaging major banks and fintech firms to explore how crypto assets and central bank digital currencies (CBDCs) can enhance Australia’s financial infrastructure.

Project Acacia is a collaborative effort between the RBA and the Digital Finance Cooperative Research Centre, with regulatory support from the Australian Securities and Investments Commission (ASIC).

ASIC is providing regulatory relief to allow participants to experiment with tokenized asset transactions, including the use of CBDCs in certain scenarios.

ASIC Commissioner Kate O'Rourke noted that the relief instrument will enable wholesale market testing of technologies that could potentially boost efficiency and foster economic growth.

In this expanded phase, the project will test a variety of settlement assets, such as stablecoins, bank-issued deposit tokens, a pilot wholesale CBDC, and new applications for banks’ existing exchange settlement accounts at the RBA.

This multifaceted approach aims to assess the practical benefits and challenges of integrating digital and tokenized money into Australia’s wholesale financial markets.

The pilot will involve participation from some of Australia’s largest financial institutions, including the Commonwealth Bank of Australia, Australia and New Zealand Banking Corporation, and Westpac Banking Corporation.

These organizations will work alongside fintech innovators to evaluate the efficiency, security, and scalability of tokenized settlement solutions.

Brad Jones, assistant governor for the financial system at the RBA, emphasized the importance of this initiative:

“Project Acacia represents an opportunity for further collaborative exploration on tokenized asset markets and the future of money by the public and private sectors in Australia."

He adds the use cases selected in this project will help Australia to better understand how the digital assets along with payments infrastructure might help to uplift the functioning of the financial market in Australia.

Professor Talis Putnins from the digital Finance Cooperative Research Centre also highlighted the potential economic impact.

He referenced recent research suggesting potential economic gains in markets and cross-border payments could reach AU$19 billion annually.

Australia Jumps On The Digital Asset Bankwagon, But Face Challenges Ahead

Project Acacia is a cornerstone of the Australian government’s broader push to modernize its financial system.

In March, the Treasury outlined a plan to develop a “fit-for-purpose” digital asset framework, naming Project Acacia as a key pillar in this strategy.

The government’s active engagement with crypto assets and CBDCs reflects its commitment to fostering innovation, regulatory clarity, and global competitiveness in the digital finance sector.

This initiative aligns with global trends as 134 countries representing 98% of the global economy are exploring CBDCs, according to research by the Atlantic Council.

There also has been increasing pressure and competition coming from the Asia-Pacific region, especially from china whose digital yuan transactions had reached $986 billion by June 2024 across 17 regions and 44 countries.

While Australia's comprehensive digital asset framework encompasses tokenisation, real-world assets, and CBDC integration, but challenges remain complex.

David Lavecky, the head of Canvas explained that the Reserve Bank of Australia's approach to issuing eAUD is multifaceted, with several legal regulatory and operation hurdles still to overcome.