The Reserve Bank of Australia is working on how it would adopt tokenization in Australia's financial system under the Project Acacia and is now focusing on ways to realize the potential benefits of tokenization, according to a Wednesday speech by RBA Assistant Governor Brad Jones.

Jones noted that the Digital Finance Cooperative Research Centre (DFCRC) has found AU$24 billion of potential annual gains for Australia from efficiency improvements that will come from tokenization and said that the RBA will work with DFCRC to explore a new digital financial market infrastructure sandbox.

The partnership could allow industry and policymakers to build on the learnings from Project Acacia and smooth the path to implementation by providing a safe space for the testing and scaling of tokenized money, Jones said. To maximize synergies, this exploration will start following the independent review commissioned by the Australian Government into Australia's financial sandbox arrangements.

Jones said that the benefits of tokenization include lower costs, reduced intermediaries, and better efficiency, but risks remain, including fragmented liquidity, tech limits, legal uncertainty, and interoperability issues.

Jones said that the final report on Project Acacia will outline a range of initiatives to be progressed by the RBA in conjunction with Council of Financial Regulators partners, the DFCRC, and industry.