The Reserve Bank of Australia has shifted its focus from questioning tokenization's role in wholesale markets to charting its implementation, with stablecoins and bank deposit tokens potentially occupying distinct but complementary roles, Assistant Governor Brad Jones said in a speech on Wednesday. 

Presenting findings from Project Acacia, Jones said the central bank now views tokenization's adoption as a matter of "how" rather than "if."

Jones noted that analysis from the Digital Finance Cooperative Research Centre (DFCRC) estimates the technology could deliver AU$24 billion ($16.7 billion) in annual efficiency gains to the Australian economy, with further upside if new markets emerge.

The project examined 20 use cases involving tokenized assets such as government bonds, corporate bonds, repos and investment funds. Settlement was conducted using four forms of money: wholesale central bank digital currency, exchange settlement account balances, stablecoins and bank deposit tokens.

Complementary roles for tokenized money

Jones outlined a scenario where the two forms of tokenized private money serve distinct functions.

Stablecoins, he said, could fill a niche role in smaller, greenfield tokenized markets, while bank deposit tokens — backed by prudential regulation and central bank liquidity facilities — would play a more prominent role in larger markets.

The speech also identified several constraints in the country's wholesale markets, including entrenched network effects that limit competition, risk aversion stemming from legal and regulatory uncertainty, and coordination failures that have hampered strategic planning.

To address these challenges, the RBA said it will partner with the Council of Financial Regulators, the DFCRC and industry participants on a series of initiatives. A new digital financial market infrastructure sandbox will provide a stage-gated environment for testing tokenized assets, money and settlement systems.

The RBA is also set to review exchange settlement account access policies once pending payment service provider licensing reforms clear the parliament.

Jones said industry participants viewed a wholesale CBDC as "potentially helpful, but far from essential" for tokenized markets to gain traction, pointing to developments in the U.S., where tokenized repo markets now see daily activity approaching $400 billion.

The central bank also plans to form a joint "Regulator-Industry Tokenisation Advisory Group" to address legal and regulatory challenges surfaced in Project Acacia. An expanded Deposit Token Working Group will focus on interoperability for deposit tokens issued by different banks. CFR agencies will also launch a C-suite roundtable on digital finance.