Australia Central Bank: Stablecoins and Bank Deposit Tokens Can Coexist in Billion Dollar Tokenization Market

Gate News reports that Brad Jones, Assistant Governor of the Reserve Bank of Australia, said on Wednesday that the central bank has shifted its focus from questioning the role of tokenization in wholesale markets to planning its implementation. Stablecoins and bank deposit tokens will play complementary roles in future tokenized markets. Jones stated at the “Acacia Project” research release that the application of tokenization has shifted from “feasibility” to “how to implement.”

According to the Digital Financial Cooperation Research Center (DFCRC), tokenization technology could improve efficiency in the Australian economy by approximately AUD 24 billion (about USD 16.7 billion) annually. If new market potentials emerge, economic benefits could further expand. The Acacia Project examined 20 tokenized asset use cases, including government bonds, corporate bonds, repurchase agreements, and investment funds, with settlement methods covering wholesale central bank digital currencies, exchange settlement account balances, stablecoins, and bank deposit tokens.

Jones emphasized that two types of tokenized currencies will serve different roles: stablecoins are suitable for emerging, small-scale markets, while bank deposit tokens are more important in larger, regulated markets. He also pointed out that Australia’s wholesale market is still limited by network effects, legal and regulatory uncertainties, and poor coordination.

To address these challenges, the Reserve Bank of Australia will collaborate with the Financial Regulator, DFCRC, and industry participants to establish a digital financial market infrastructure sandbox, providing phased testing environments. The central bank also plans to review policies on exchange settlement account access and establish a “Regulator-Industry Tokenization Advisory Group” to resolve legal and regulatory barriers. Additionally, efforts will focus on expanding the workgroup on deposit tokens, focusing on interoperability among different banks issuing deposit tokens, and promoting a digital financial executive roundtable.

Jones stated that wholesale CBDC (central bank digital currency) can be helpful but is not a necessary condition for the development of a tokenized market. Referencing the US experience, its tokenized repurchase market has a daily trading volume approaching USD 400 billion, offering a valuable reference for Australia.