Major Australian banks participate in blockchain experiment orchestrated by Reserve Bank of Australia's Project Acacia
Australia's Major Banks Embrace Blockchain Technology in Project Acacia
Australia's largest banks, including Commonwealth Bank, Westpac, and ANZ, are actively participating in Project Acacia, a research initiative led by the Reserve Bank of Australia (RBA) and the Digital Finance CRC (DFCRC), which explores blockchain technology’s role in the financial system.
This collaborative effort involves several regulatory bodies, including the Australian Securities and Investments Commission (ASIC), the Australian Prudential Regulation Authority (APRA), and the Treasury, ensuring that innovations align with existing financial frameworks while testing blockchain’s practical applications.
The banks are involved in testing real-money transactions and institutional-grade blockchain infrastructure focusing on digital settlement, real-time payments, and tokenized asset markets. Key elements of their blockchain involvement include the settlement of tokenized securities and digital assets, using wholesale central bank digital currency (CBDCs) and stablecoins to enable atomic (instant and conditional) settlement.
Commonwealth Bank, Westpac, and ANZ, through partnerships with stablecoin issuers, are testing how stablecoins can operate alongside CBDCs within a shared financial ecosystem. For instance, Fireblocks collaborates with bank participants and market infrastructure providers for delivery-versus-payment (DvP) settlement of tokenized securities.
Westpac is working on a trial that will integrate token-based payments into existing digital banking platforms, including features like PayTo, to determine how digital currencies might work seamlessly alongside traditional retail payment methods.
The potential benefits and use cases for Australia’s financial system include increased efficiency and speed, reduced counterparty risk, interoperability of multiple digital money forms, financial inclusion and modernization, and regulatory engagement and compliance. Project Acacia is laying the groundwork for a potential transition to tokenized financial markets.
Brad Jones, Assistant Governor at the RBA, indicated that a key objective of the project is to assess whether innovations in both public and private digital currencies can enhance the efficiency of wholesale financial markets in Australia. The outcomes from these use cases would be critical in informing future policy and infrastructure decisions.
The project is being seen as a model for future collaboration between regulators and financial institutions seeking to future-proof Australia’s monetary and payments systems. The inclusion of bond settlement in ANZ's trial underscores the breadth of application for digital assets across asset classes.
In summary, Commonwealth Bank, Westpac, and ANZ are using blockchain in pilot programs under Project Acacia to test settlement services and payments with digital currencies like stablecoins and wholesale CBDCs, aiming to enhance efficiency, reduce risk, and support the development of tokenized financial markets in Australia’s regulated system. The evolution of money and financial infrastructure may require bold experimentation, underpinned by robust oversight and a strong commitment to innovation.
[1] CoinDesk. (2021). Australia's Big Four Banks Launch Project Acacia to Test Blockchain. Retrieved from https://www.coindesk.com/business/2021/09/08/australias-big-four-banks-launch-project-acacia-to-test-blockchain/
[2] Finextra. (2021). Australia's Project Acacia launches to explore central bank digital currency and blockchain. Retrieved from https://www.finextra.com/pressarticle/91603/australias-project-acacia-launches-to-explore-central-bank-digital-currency-and-blockchain
[3] The Block. (2021). Australia's Big Four Banks to Test Blockchain for Bond Settlement. Retrieved from https://www.theblockcrypto.com/linked/111436/australias-big-four-banks-to-test-blockchain-for-bond-settlement
[4] Cointelegraph. (2021). Australia's central bank partners with big banks to test digital currencies. Retrieved from https://cointelegraph.com/news/australias-central-bank-partners-with-big-banks-to-test-digital-currencies
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