The Reserve Bank of Australia has identified the cash leg of a trade — the digital money used to settle — as the main hurdle preventing tokenized asset markets from scaling. In a report released Wednesday, the RBA and the Digital Finance Cooperative Research Centre said that without a settlement asset that can move quickly and cheaply across platforms, the promise of tokenized securities, repos, and carbon credits will remain limited. The finding comes from Project Acacia, a 20-use-case pilot that tested everything from fixed-income issuance to private market trading.
Why the cash leg matters
Tokenization lets assets like bonds or fund units live on a shared digital ledger, theoretically cutting settlement time from days to minutes. But the RBA found that the real bottleneck isn't the asset side — it's the cash side. If the money used to pay for those assets can't settle at the same speed or on the same infrastructure, the whole system stalls. The report calls the cash leg the single factor that determines whether tokenized rails can reach scale.
Four settlement candidates
Project Acacia looked at four ways to move the cash leg. The first is the existing system: RBA exchange settlement account balances, which are central bank money but not tokenized. The second is a wholesale central bank digital currency, or wCBDC — a tokenized version of central bank reserves. The third is tokenized commercial bank deposits, essentially digital IOUs from private banks. The fourth is stablecoins, private tokens pegged to the dollar or another asset. Each option has trade-offs in speed, risk, and interoperability.
Interoperability and liquidity fragmentation
The report warns that if different settlement forms — say, a bank deposit token on one network and a stablecoin on another — can't talk to each other, liquidity will splinter. That would defeat the efficiency gains tokenization is supposed to bring. The RBA argues that central bank money should serve as an anchor, providing a common reference point that all private digital money can connect to. But it leaves the door open for stablecoins and bank deposit tokens to play a role, as long as they meet interoperability standards.
RBA’s stance on CBDC
RBA Assistant Governor Brad Jones said in a statement that a wholesale CBDC could help but isn't necessary to get started. He pointed to existing tools like RITS — the RBA's settlement system — and fast payment rails as nearer-term options. That suggests the central bank isn't in a rush to issue a digital dollar for wholesale use, even as it studies the technology. The report also notes several barriers beyond settlement: legal and regulatory uncertainty, industry coordination, and the risk that pre-funded trades tie up liquidity.
What comes next is unclear. The RBA has not announced a follow-up pilot or timeline. But the report makes plain that if tokenized markets are going to grow, someone — central bank, private sector, or both — has to fix the cash leg first.
