Three of Australia’s largest banks have partnered in a new initiative spearheaded by the Reserve Bank of Australia (RBA) aimed at examining how blockchain technology could reshape digital payments and institutional settlements. The initiative, titled Project Acacia, brings together a diverse group of public and private entities to trial new forms of digital money and assess their impact on Australia’s financial system.
Commonwealth Bank (CBA), Westpac, and ANZ are participating in separate pilot programs as part of the broader effort to evaluate blockchain infrastructure’s potential to modernize how financial transactions are processed. Their involvement reflects the growing institutional interest in exploring the operational and economic benefits of tokenized finance.
Diverse Use Cases Across Major Financial Institutions
CBA has teamed up with JPMorgan to test how digital innovations could streamline the short-term funding market, particularly the repo market, which is central to interbank lending and liquidity. This trial will be conducted in collaboration with the Australian Securities Exchange (ASX) and HQLAx, a European fintech firm focused on digitizing collateral.
CBA’s experiment aims to determine whether blockchain-enabled settlement mechanisms could bring greater speed and efficiency to repo transactions. In this market, government bonds or other securities are sold with a simultaneous agreement to repurchase them, often within 24 hours. The differential between sale and repurchase prices effectively functions as short-term interest on secured loans—an essential tool for managing bank liquidity and stabilizing bond markets.
Westpac, meanwhile, is working on a trial that will integrate token-based payments into existing digital banking platforms, including features like PayTo. The focus of this effort is to determine how digital currencies might work seamlessly alongside traditional retail payment methods. The bank is examining how to offer customers enhanced payment choices while maintaining security and regulatory compliance.
ANZ is assessing the possibility of conducting bond trades using a wholesale central bank digital currency (CBDC), highlighting the potential for blockchain-based monetary instruments in fixed-income markets. Although details of ANZ’s trial are not yet public, the inclusion of bond settlement in the project underscores the breadth of application for digital assets across asset classes.
Public-Private Collaboration for Digital Asset Innovation
Project Acacia is being conducted in partnership with the Digital Finance Cooperative Research Centre (DFCRC), a government and industry-backed entity focused on accelerating digital finance innovation. The initiative also involves several regulatory bodies, including the Australian Securities and Investments Commission (ASIC), the Australian Prudential Regulation Authority (APRA), and the Treasury, signaling a coordinated national effort to evaluate tokenization’s potential.
The RBA has stated that ASIC will provide limited regulatory relief for pilot participants, allowing companies to experiment with settlement methods that currently lie outside existing legal frameworks. This approach is intended to create a safe testing environment that promotes innovation while enabling regulators to understand emerging risks and opportunities.
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, when integrated with modern payment infrastructure, can enhance the efficiency of wholesale financial markets in Australia. He noted that the outcomes from these use cases would be critical in informing future policy and infrastructure decisions.
Regulators Embrace Real-World Testing
ASIC commissioner Kate O’Rourke expressed support for the initiative, viewing Project Acacia as a timely opportunity for the financial sector and regulatory agencies to jointly explore the practical implications of blockchain and digital asset technologies. She noted that the regulatory exemption granted to participants would facilitate responsible experimentation, helping the industry uncover efficiency gains while addressing potential risks.
By enabling pilot programs focused on areas such as carbon credits, private markets, trade receivables, and government bond transactions, Project Acacia is laying the groundwork for a potential transition to tokenized financial markets. 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.
Ultimately, the project reflects a growing recognition among policymakers and industry leaders that the evolution of money and financial infrastructure may require bold experimentation, underpinned by robust oversight and a strong commitment to innovation.