ANZ Banks Selected for RBA’s Project Acacia Trial

ANZ to pioneer Tokenised Finance Trials in RBAS Project Acacia

ANZ has been selected to lead two key pilot programs within the Reserve Bank of Australia’s (RBA) Project Acacia, exploring the potential of tokenised assets and digital money to reshape the Australian financial landscape.The six-month trials will focus on transforming trade finance and fixed income operations.

One use case,”Tokenised Trade Payables,” aims to alleviate working capital pressures for suppliers and streamline financial processes. It will investigate the use of digital currencies, including a wholesale Central Bank Digital Currency (wCBDC), and the tokenisation of legally binding Self-reliant Payment Undertakings (IPUs) to automate settlements and boost liquidity in wholesale markets.ANZ will collaborate with Netwealth, MessageXchange, and RMIT University on this initiative.

The second pilot, “Tokenised Fixed Income,” will examine the benefits of wCBDC as a tokenised form of money for risk-free settlement of credit and liquidity. Tokenising fixed income assets could significantly improve efficiency by automating issuance, corporate actions, and settlement through smart contracts. Austraclear,ASX’s settlement system,will advise on this aspect of the project.

According to ANZ’s Head of Digital Innovation, Nigel Dobson, the pilots represent a “unique possibility” to unlock efficiencies, liquidity, and resilience within the Australian financial system. He highlighted ANZ’s existing investments in enterprise payments, digitisation of trade and capital markets, and capabilities in stablecoins and asset tokenisation.

Project Acacia is a collaborative effort between the RBA and the Digital Finance Cooperative Research Center (DFCRC) to assess the broader implications of digital money for Australia’s financial future. The trials will test various settlement models and evaluate the potential economic advantages of adopting digital currencies.

Further details on Project Acacia are available on the DFCRC website: https://dfcrc.com.au/projects-cbdc-acacia/

What specific wholesale CBDC use cases is ANZ testing as part of Project Acacia?

What is Project Acacia?

Project Acacia, initiated by the Reserve Bank of Australia (RBA), is a groundbreaking initiative exploring the potential of a Central Bank Digital Currency (CBDC) for Australia. This pilot program aims to assess the feasibility and benefits of a digital Australian dollar, focusing on innovative use cases and the underlying technology. The project isn’t about replacing cash, but rather exploring how a digital form of the Australian dollar could enhance the existing payment system. Key areas of inquiry include wholesale payments, and possibly, retail applications.

ANZ’s Role in the Trial: A Deep Dive

ANZ is one of several major Australian banks selected to participate in the first phase of the RBA’s Project Acacia trial. This selection signifies ANZ’s leadership in financial innovation and its commitment to exploring the future of payments.

Here’s what ANZ’s involvement entails:

wholesale CBDC Focus: ANZ’s participation is primarily centered around the wholesale CBDC use case. This means exploring how a digital Australian dollar could streamline and improve efficiency in interbank settlements and other wholesale financial transactions.

Technology Exploration: The bank will be actively involved in testing the underlying distributed Ledger Technology (DLT) and exploring its capabilities for secure and efficient digital currency management.

Collaboration with the RBA: ANZ will work closely with the RBA and other participating institutions to develop and test various aspects of the CBDC platform.

Real-World Testing: The trial will involve simulated real-world scenarios to assess the performance, scalability, and security of the CBDC system.

Benefits of a Wholesale CBDC – Why ANZ is Participating

ANZ sees significant potential benefits in a wholesale CBDC, driving their active participation in Project Acacia.These include:

Reduced Settlement Times: Current interbank settlement processes can take time. A CBDC could enable near-instantaneous settlement, reducing risk and improving capital efficiency.

Lower Transaction Costs: Streamlining processes with a digital currency can potentially lower transaction fees associated with wholesale payments.

Enhanced Clarity: DLT provides a transparent and auditable record of transactions,improving accountability and reducing fraud risk.

Innovation in Financial Services: A CBDC could unlock new opportunities for innovation in financial products and services, such as smart contracts and automated payments.

Improved Competition: A more efficient payment system could foster greater competition among financial institutions.

The Technology Behind Project Acacia: DLT and its Implications

The RBA is utilizing Distributed Ledger Technology (DLT) as the foundation for Project Acacia. Specifically, the trial is exploring the use of a permissioned DLT, meaning access is restricted to authorized participants.

Key aspects of the technology include:

Tokenization of the australian Dollar: The digital Australian dollar will be represented as tokens on the DLT network.

Smart Contract Functionality: Smart contracts can automate payment processes and enforce pre-defined rules, enhancing efficiency and reducing manual intervention.

Security and Privacy: robust security measures are being implemented to protect the integrity of the CBDC system and ensure the privacy of transaction data.

Interoperability: A key focus is ensuring the CBDC system can seamlessly interact with existing payment infrastructure.

Potential Impact on ANZ Customers and the Broader Economy

while the initial phase focuses on wholesale applications, the long-term implications of Project Acacia could extend to ANZ’s retail customers and the broader Australian economy.

Faster and Cheaper Payments: Ultimately, a retail CBDC could lead to faster and cheaper payments for consumers and businesses.

Increased Financial Inclusion: A digital currency could provide access to financial services for underbanked populations.

new Business Models: The technology could enable new business models and innovative financial products.

* Enhanced Resilience: A CBDC could provide a more resilient payment system, less vulnerable to disruptions.

Troubleshooting Common Banking Issues (Related to Digital Access)

While Project Acacia focuses on future innovation, ensuring current digital banking access is crucial.ANZ customers experiencing issues loading Internet Banking should first verify they meet the minimum technical requirements. Common problems include outdated browsers or insufficient system resources.

Timeline and next Steps for Project Acacia

The first phase of the Project Acacia trial is expected to run through 2025. The RBA will evaluate the results of the trial and determine whether to proceed with further development and testing.

Key milestones include:

1. Ongoing Testing: Continued testing of the wholesale CBDC use case with participating banks like ANZ.
2. Exploration of Retail Applications: Potential expansion of the trial to explore retail CBDC applications.
3. Policy Considerations: Ongoing discussions with stakeholders regarding the policy and regulatory implications of a CBDC.
4. Public Consultation: The RBA is committed to engaging with the public and seeking feedback on the project.