RBA and DFCRC Release Findings From Project Acacia (RBA)
The Reserve Bank of Australia (RBA) and Digital Finance Cooperative Research Centre (DFCRC) published a report detailing the findings of Project Acacia, which examined how innovations in digital money and settlement infrastructure could support the development of wholesale tokenized asset markets in Australia. They tested 20 wholesale tokenized asset use cases across fixed income, repos, and managed funds. Atomic settlement, programmability, and composability benefits were demonstrated across asset classes, estimating A$24 billion in annual economic gains. Pilot wholesale central bank digital currency (CBDC) proved feasible on third-party distributed ledger technology (DLT) platforms but raised governance, finality, and liquidity fragmentation challenges. Real-time gross settlement (RTGS) synchronization mechanisms delivered comparable benefits at lower complexity. Deposit tokens are assessed as more suitable than stablecoins for wholesale settlement given prudential backing, though interbank transferability and deposit insurance scheme coverage require legislative clarification. They identified legal and regulatory uncertainty, coordination gaps, and interoperability as scaling barriers, motivating a post-Acacia program including a digital financial market infrastructure sandbox, expanded deposit token work, and RBA settlement infrastructure consultations. [RBA]
The University of Toronto Press published a book by lawyer and law professor Benjamin Geva on the evolution of money from barter to coins, banknotes, scriptural money, electronic money, and digital currencies. Of course, this has all been covered elsewhere, but what makes this book unique, is the deep, yet very readable, focus on legal aspects, particularly from the perspective of the Canadian monetary regime. The latter includes a thorough history going back to New France’s use of agricultural commodities and playing cards as money, to Bank of Canada explorations of both retail and wholesale central bank digital currencies (CBDCs). The book also extensively covers the legal aspects of virtual currencies, particularly stablecoins, and digital bearer instruments (DBIs). Interestingly, Geva makes a case for DBIs as the optimal Canadian retail CBDC as a path of least resistance through the Bank of Canada and Currency Acts, plus several architectural, economic, and privacy advantages over account-based platforms. He also singles out synthetic CBDCs as an optimal solution for achieving uniformity of money in a framework allowing competition. The book ends by addressing the challenges faced by the current monetary system as the digital age continues to evolve and become more decentralized. [To order the book, click here]
I am honored to have been given the opportunity to contribute a chapter to the soon-to-be released book, Tokenisation of Money: From Fiat Currencies to Stablecoins, published by Springer! Expertly edited by Prof. Selim Yazıcı, Prof. C. Coşkun Küçüközmen, and Dr. Michael Salmony, it serves as a critical handbook for navigating the profound transformation of the global financial services industry. At a time when there is substantial confusion regarding new digital instruments, this book distinguishes reality from hype across the dimensions of CBDCs, stablecoins, and tokenized deposits. In my contribution, I provide an overview and reality check on global retail central bank digital currency (CBDC) developments. The book will be available via digital platforms by the end of May and you can pre-order the hard cover version here: https://link.springer.com/book/9783032229458!
FYI I produce a monthly digest of digital fiat currency (DFC) developments exclusively for the official sector (e.g., central banks, ministries of finance and international financial institution (e.g., the BIS, IMF, OECD, World Bank)) plus academics and firms that are active in the DFC space (commercial banks, technology providers, consultants, etc.). (DFCs include central bank digital currency (CBDC), stablecoins and tokenized deposits.) It goes out via email on the first business day of every month, and if you’re interested in being on the mailing list, please email me at john@kiffmeister.com.
