Project Acacia: Next steps for the future of money
Westpac is ready for action as the RBA and Digital Finance CRC explore new digital forms of money and the potential for a central bank digital currency for wholesale payments in a new project.
This momentum builds on a broader shift already underway. Digitalisation is the dominant trend in the evolution of money.
Consumers and businesses are embracing the convenience of cashless, real-time payments—using apps, digital wallets, and contactless technology to transact faster and smarter. For businesses, this shift offers a competitive edge through improved cash flow, operational efficiency, and stronger customer and supplier relationships.
As the shift to real-time payments reshapes how consumers and businesses transact, it also opens the door to new forms of digital money, ushering in the next wave of financial innovation, including a digital currency backed by central banks. The Reserve Bank of Australia (RBA) has taken a leading role in exploring different implementation models for a potential CBDC in collaboration with major players in the Australian financial system.
The RBA also recognises that the industry is examining the potential for the tokenisation of assets as a way of increasing efficiency and reducing risk in issuance, trading, clearing and settlement.
The central bank has estimated the potential savings from tokenisation – where assets are issued as digital tokens on a blockchain – could be in the range of AUD 1 billion to AUD 4 billion each year, with annual savings of up to AUD 13 billion available to issuers in Australian capital markets [source RBA, 2024].
To this end, Project Acacia is a key step in understanding how a CBDC can support these innovations in wholesale markets by providing risk-free settlement assets, backed by a resilient architecture and an appropriate regulatory environment.
The project is also guided by the Digital Finance Co-operative Research Centre, a 10-year AUD 180 million research initiative funded by industry partners, universities and the Government to drive collaboration and harness opportunities from the digital transformation of financial markets.
Project Acacia’s focus is on the movement of large funds across the financial system and the types of payments made by large corporates.
Leading payments innovation
Jeff Byrne, Managing Director, Global Transaction Services, Westpac Institutional Bank, said “Westpac is helping the RBA explore what digital currencies could look like in the real world, while giving our customers access to new payment options safely and securely.
”We’re delighted to be selected to participate in this project. It’s a great example of collaboration across our business, technology and strategy teams and a proud moment driving innovation in financial infrastructure and real-time payments”, said Byrne.
Westpac continues to make strategic investments in its real-time payments capabilities, including, PayTo, launched in 2024 to digitise processes and offer payment flexibility to its customers. PayTo is a digital-first alternative to direct debit payments, enables real-time payments, offering visibility and control to customers.
Among its benefits are rich transaction data, verified authorisation, secure storage and the minimisation of costs through reduced administration. PayTo operates on the New Payments Platform and settles transactions using the banks’ existing exchange settlement accounts with RBA.
The Westpac-led proof of concept seeks to demonstrate that the existing PayTo infrastructure and capabilities are sufficiently robust to enable the settlement and clearing of large payments in the wholesale banking space required to perform tokenised asset transactions.
The proof of concept will extend Westpac’s PayTo capabilities, already used by clients today, to emerging technologies such as asset tokenisation. The project will demonstrate ways to unlock new value while protecting customers.
Futureproofing systems
David Walker, Westpac’s Chief Technology Officer, says that the proof of concept is an opportunity for Westpac to test the practical use of post-quantum cryptography in financial systems, an advance in encryption that uses new algorithms designed to be resistant to possible future attacks from quantum computers.
Westpac has a long-term equity investment in pioneering Australian cybersecurity company QuintessenceLabs, which has built quantum-enhanced cryptography solutions that are already in market. QuintessenceLabs has been collaborating with government defence agencies and large organisations as a key partner on a number of experiments and deployments of quantum-enhanced technology.
Expected to be completed in the coming months, Westpac’s proof of concept is also being developed in partnership with Imperium Markets and Chainlink.
“This is a real-world opportunity to learn and create something that will be incredibly important in the future, and something we might need to apply at scale,” he says.
“It’s a pre-emptive work in many ways because, while it might not be immediately required, it helps us learn, prepares us and gives us confidence and experience and that will be essential in the future.”
Walker also emphasises the collaborative aspect of Project Acacia, not just with the RBA but with other financial institutions and major players in the telecoms and cybersecurity sectors.
“Creating the next generation of payments architecture requires the strategic involvement of all the banks, telcos, retailers and governments working together. Project Acacia is helping demonstrate the willingness of many of those organisations to work together on these challenges, and that together we are building new capabilities.”
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