The Reserve Bank of Australia said Project Acacia, a research project led by the RBA and the Digital Finance Cooperative Research Center (DFCRC), revealed considerable industry interest in tokenization and showed potential to materially improve the efficiency and functioning of Australia's wholesale asset markets, according to a Monday report.
The project involved industry participants developing and testing 20 wholesale tokenized market use cases across multiple asset classes, including fixed income, managed funds, repos, structured products, private markets, carbon credits, and trade payables.
The use cases highlighted significant opportunities across the asset lifecycle, including improved capital efficiency via reduced settlement frictions, reduced counterparty risk, enhanced access to 24/7 liquidity pools, and reductions in intermediation costs and operational errors from automation, the report added.
The project also showed that opportunities for enhancing wholesale markets do not rely solely on tokenization, with interim reforms such as more expansive use of existing fast payment rails, better alignment of infrastructure operating hours with global financial centers, and greater transparency in key funding markets also able to deliver meaningful benefits, the RBA said.
The RBA and DFCRC, with partner agencies on the Council of Financial Regulators (CFR), are seeking to build on the industry momentum generated by Project Acacia through the establishment of a new multi-stream program of work, with the RBA also planning to consult with industry on potential changes to existing settlement infrastructure and examine how innovations in tokenized money could improve wholesale cross-border payments.