The Reserve Bank of Australia (RBA) has announced the start of the second phase of the digital currency project aimed at exploring their role in financial markets.
Launch of Digital Currency Trials
On Thursday, the RBA representative announced the transition to the next phase of exploring digital currencies. The trials will focus on the role of digital money and tokenization in supporting wholesale financial markets. Stablecoins, bank deposit tokens, and a pilot wholesale central bank digital currency (CBDC) will be used during the trials. This phase will be part of Project Acacia, a joint initiative by the RBA and the Digital Finance Cooperative Research Centre.
Involvement of Major Banks
Three of the four major Australian banks are participating in the trials: Commonwealth Bank (CBA), Australia and New Zealand Banking Group (ANZ), and Westpac Banking Corporation. CBA will work with JPMorgan to assess how digital currencies could enhance efficiency and liquidity with lower risks in the repo market. Meanwhile, ANZ is leading the testing of tokenized trade payables and will investigate tokenized fixed-income instruments.
Regulatory Support and Current State of Crypto Regulation
Australia’s markets regulator, the Australian Securities and Investment Commission (ASIC), has granted participants some regulatory relief, allowing them to test assets currently outside the law. ASIC noted that it sees useful applications for technologies underlying digital assets in wholesale markets. The Australian government is also working on a new regulatory framework for cryptocurrencies to enhance understanding of the nature of banking restrictions.
The launch of digital currency trials in Australia marks an important step in exploring their applications in financial markets. Involvement from major banks and regulatory support demonstrate the growing interest in digital currencies and their potential in the economy.
