Project Acacia: Supporting Australia鈥檚 economy in the digital age
16 September 2025
Australian banks and industry participants have set sail on an initiative that seeks to strengthen the region鈥檚 financial market, and which could provide greater efficiency and liquidity to the repo market. Carmella Haswell reports
Image: stock.adobe.com/anekoho
The Reserve Bank of Australia (RBA), alongside a number of participants including HQLAX and J.P. Morgan, has embarked on a project which could provide significant improvements to the region鈥檚 growing AU$350 billion (US$228.2 billion) repo market.
With the help of the Digital Finance Cooperative Research Centre (DFCRC), Project Acacia will explore how innovations in digital money and existing settlement infrastructure might support the development of Australian wholesale tokenised asset markets.
With 24 use cases, the project will see the involvement of real moment and real asset transactions, as well as asset classes such as fixed income and carbon credits. A use case of particular interest to the repo community will evaluate how digital currencies and digital collateral records could deliver greater efficiency and liquidity with lower risk in the strategically important repo market.
The RBA has chosen a number of firms and their offerings to take part in this use case, which involves the Commonwealth Bank of Australia鈥檚 (CBA鈥檚) Digital Assets platform, J.P. Morgan鈥檚 multi-asset tokenisation platform Kinexys Digital Assets, the local expertise of the Australian 糖心vlog Exchange (ASX), and the HQLAX collateral mobility solution.
For Sophie Gilder, CBA鈥檚 managing director, blockchain and digital assets, the project will be 鈥渉ugely鈥� significant for Australia鈥檚 financial market with various aspects of Project Acacia which will be 鈥渧ery exciting and will be transformative over time鈥�.
鈥淲e cannot underestimate the gains that could result from any of these various use cases, particularly when you look at the multitude of skilled and experienced participants who have partnered with the RBA and the Digital Finance Cooperative Research Centre,鈥� she adds.
Testing of use cases will occur over the next six months, with a report on the findings from the project expected to be published in the first quarter of 2026. The findings will support the RBA鈥檚 ongoing research into how innovation in the financial system can best support the Australian economy in the digital age.
A growing market
Australia possesses a well-established repo market in government and other fixed income securities, according to the International Capital Market Association (ICMA). In its recently published guide detailing the current repo market in Australia, the association highlights that the outstanding size of repo grew by about 75 per cent over the past three years 鈥� from around AU$200 billion at the end of 2021 to about AU$350 billion by the middle of 2024.
The core drive behind this is a boost to bond and repo trading driven by expectations of lower bond yields, following the introduction of new monetary policy measures in response to the Covid-19 shock in 2020.
鈥淣ot surprisingly, the repo 鈥� or the repurchasing agreement 鈥� market will mean nothing to the general public; but for banks, financial institutions, and market professionals it is of vital and growing importance in providing essential short-term funding and liquidity 鈥� both of which are critical to the running of a modern-day economy like Australia鈥檚,鈥� explains Gilder.
One of the strengths of the Australian repo market is that its core is securities-driven, although most repos trade at the general collateral or GC repo rate.
For ICMA, this means that the repo market in Australia supports not only the underlying cash market in bonds but also fosters liquidity in both over-the-counter (OTC) and exchange-traded derivatives.
The cash and derivatives markets, in turn, support the repo market by providing collateral securities and generating demand for repo.
In 2019, the repo market became the second largest onshore money market in Australia, according to RBA鈥檚 鈥楾he Australian Repo Market: A Short History and Recent Evolution鈥� article. In part, strong growth in the repo market is due to repo being a safer product than unsecured alternatives like bank bills.
In addition to its size, the range of participants and diversity of collateral used to obtain funds under repo has grown in recent years. As a result, the repo market provides valuable information about conditions in short-term wholesale funding markets, the RBA article notes.
Exploring further, Gilder states: 鈥淏ut like many markets, the infrastructure on which it runs, and which allows it to function efficiently is very much based on a system developed many decades ago to the point that it still relies on telephone calls and manual entries into various systems to complete trades.
鈥淵ou can imagine therefore the inefficiencies that exist, and which have become in-built barriers to improving the speed, security, safety and real-time nature of the market.鈥�
Building a more productive economy
Focusing on the use case, the CBA will simulate, via a proof of concept, a series of bilateral repos, collateralised by Australian government securities (AGS) represented on a digital registry and settled in wholesale CBDC or CBA Deposit Tokens.
This work will also involve research on the design of an interface between the digital registry and the central securities depository where the AGS are lodged.
According to Gilder, the repo market use case study is very much CBA鈥檚 key focus in Project Acacia, albeit in the past the bank has collaborated closely with the RBA and DFCRC on other applications of central bank digital currency.
鈥淧roject Acacia is a natural extension of that and we see our role as two-fold in this aspect: firstly, utilising the experience and knowledge we have gained over many years to support the country鈥檚 economic development and secondly, collaborating with major players such as our partners in the repo market study to come up with practical and sustainable solutions to ensure the global competitiveness of Australia鈥檚 financial markets,鈥� she explains.
CBA says it has long-standing interest in the development and use of blockchain technology and how it could be applied in supporting and utilising digital assets when applied to a variety of financial markets.
For example, the bank was chosen by the World Bank back in 2018 to deliver the first global bond transaction on a blockchain.
Since then, CBA has worked closely with the RBA on a number of projects exploring how blockchain and digital assets could be used to improve the efficiency and speed of financial markets, namely the central bank鈥檚 wholesale digital currency project in 2020 and subsequently its more expansive use case study and industry pilots using a General Purpose CBDC in 2023.
Gilder adds: 鈥淲e share the RBA鈥檚 ambitions for Australia to be at the forefront of payments and financial markets innovation given the real benefits this will bring in regard to efficiency and building a more productive economy over the long term.鈥�
Looking forward on the potential outcome of this project, Gilder notes that while the aims are 鈥渁mbitious鈥�, the CBA believe there is real momentum behind what the RBA and the DFCRC are looking to achieve and that does not only apply to the repo case study but to all the other 23 aspects of Project Acacia.
She concludes: 鈥淚t is a big agenda, covering many different parts of the Australian financial system, but in saying that the breadth and depth of what is now underway underscores the importance and critical nature of these key markets to the country鈥檚 economic future.
鈥淚t鈥檚 an exciting and significant stage in the life of Project Acacia and I think we will see real progress having been made on a number of fronts when the RBA reports its findings on the testing of the use cases in early 2026.鈥�
With the help of the Digital Finance Cooperative Research Centre (DFCRC), Project Acacia will explore how innovations in digital money and existing settlement infrastructure might support the development of Australian wholesale tokenised asset markets.
With 24 use cases, the project will see the involvement of real moment and real asset transactions, as well as asset classes such as fixed income and carbon credits. A use case of particular interest to the repo community will evaluate how digital currencies and digital collateral records could deliver greater efficiency and liquidity with lower risk in the strategically important repo market.
The RBA has chosen a number of firms and their offerings to take part in this use case, which involves the Commonwealth Bank of Australia鈥檚 (CBA鈥檚) Digital Assets platform, J.P. Morgan鈥檚 multi-asset tokenisation platform Kinexys Digital Assets, the local expertise of the Australian 糖心vlog Exchange (ASX), and the HQLAX collateral mobility solution.
For Sophie Gilder, CBA鈥檚 managing director, blockchain and digital assets, the project will be 鈥渉ugely鈥� significant for Australia鈥檚 financial market with various aspects of Project Acacia which will be 鈥渧ery exciting and will be transformative over time鈥�.
鈥淲e cannot underestimate the gains that could result from any of these various use cases, particularly when you look at the multitude of skilled and experienced participants who have partnered with the RBA and the Digital Finance Cooperative Research Centre,鈥� she adds.
Testing of use cases will occur over the next six months, with a report on the findings from the project expected to be published in the first quarter of 2026. The findings will support the RBA鈥檚 ongoing research into how innovation in the financial system can best support the Australian economy in the digital age.
A growing market
Australia possesses a well-established repo market in government and other fixed income securities, according to the International Capital Market Association (ICMA). In its recently published guide detailing the current repo market in Australia, the association highlights that the outstanding size of repo grew by about 75 per cent over the past three years 鈥� from around AU$200 billion at the end of 2021 to about AU$350 billion by the middle of 2024.
The core drive behind this is a boost to bond and repo trading driven by expectations of lower bond yields, following the introduction of new monetary policy measures in response to the Covid-19 shock in 2020.
鈥淣ot surprisingly, the repo 鈥� or the repurchasing agreement 鈥� market will mean nothing to the general public; but for banks, financial institutions, and market professionals it is of vital and growing importance in providing essential short-term funding and liquidity 鈥� both of which are critical to the running of a modern-day economy like Australia鈥檚,鈥� explains Gilder.
One of the strengths of the Australian repo market is that its core is securities-driven, although most repos trade at the general collateral or GC repo rate.
For ICMA, this means that the repo market in Australia supports not only the underlying cash market in bonds but also fosters liquidity in both over-the-counter (OTC) and exchange-traded derivatives.
The cash and derivatives markets, in turn, support the repo market by providing collateral securities and generating demand for repo.
In 2019, the repo market became the second largest onshore money market in Australia, according to RBA鈥檚 鈥楾he Australian Repo Market: A Short History and Recent Evolution鈥� article. In part, strong growth in the repo market is due to repo being a safer product than unsecured alternatives like bank bills.
In addition to its size, the range of participants and diversity of collateral used to obtain funds under repo has grown in recent years. As a result, the repo market provides valuable information about conditions in short-term wholesale funding markets, the RBA article notes.
Exploring further, Gilder states: 鈥淏ut like many markets, the infrastructure on which it runs, and which allows it to function efficiently is very much based on a system developed many decades ago to the point that it still relies on telephone calls and manual entries into various systems to complete trades.
鈥淵ou can imagine therefore the inefficiencies that exist, and which have become in-built barriers to improving the speed, security, safety and real-time nature of the market.鈥�
Building a more productive economy
Focusing on the use case, the CBA will simulate, via a proof of concept, a series of bilateral repos, collateralised by Australian government securities (AGS) represented on a digital registry and settled in wholesale CBDC or CBA Deposit Tokens.
This work will also involve research on the design of an interface between the digital registry and the central securities depository where the AGS are lodged.
According to Gilder, the repo market use case study is very much CBA鈥檚 key focus in Project Acacia, albeit in the past the bank has collaborated closely with the RBA and DFCRC on other applications of central bank digital currency.
鈥淧roject Acacia is a natural extension of that and we see our role as two-fold in this aspect: firstly, utilising the experience and knowledge we have gained over many years to support the country鈥檚 economic development and secondly, collaborating with major players such as our partners in the repo market study to come up with practical and sustainable solutions to ensure the global competitiveness of Australia鈥檚 financial markets,鈥� she explains.
CBA says it has long-standing interest in the development and use of blockchain technology and how it could be applied in supporting and utilising digital assets when applied to a variety of financial markets.
For example, the bank was chosen by the World Bank back in 2018 to deliver the first global bond transaction on a blockchain.
Since then, CBA has worked closely with the RBA on a number of projects exploring how blockchain and digital assets could be used to improve the efficiency and speed of financial markets, namely the central bank鈥檚 wholesale digital currency project in 2020 and subsequently its more expansive use case study and industry pilots using a General Purpose CBDC in 2023.
Gilder adds: 鈥淲e share the RBA鈥檚 ambitions for Australia to be at the forefront of payments and financial markets innovation given the real benefits this will bring in regard to efficiency and building a more productive economy over the long term.鈥�
Looking forward on the potential outcome of this project, Gilder notes that while the aims are 鈥渁mbitious鈥�, the CBA believe there is real momentum behind what the RBA and the DFCRC are looking to achieve and that does not only apply to the repo case study but to all the other 23 aspects of Project Acacia.
She concludes: 鈥淚t is a big agenda, covering many different parts of the Australian financial system, but in saying that the breadth and depth of what is now underway underscores the importance and critical nature of these key markets to the country鈥檚 economic future.
鈥淚t鈥檚 an exciting and significant stage in the life of Project Acacia and I think we will see real progress having been made on a number of fronts when the RBA reports its findings on the testing of the use cases in early 2026.鈥�
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