Fireside Chat at the Intersekt 2025 Conference

Firside Chat

Brad Jones

Assistant Governor (Financial System)

Melbourne

–

17 September 2025

Audio

29MB

Watch video: Fireside Chat with Assistant Governor (Financial System) Brad Jones, at the Intersekt 2025 Conference, Melbourne

Transcript

Moderator

Well, welcome everyone. I know that I’ve been looking forward to this session for - since I

found out about it and it is a particularly topical discussion, not because of the whirlwind of

stablecoins and CBDC’s around the world but because we’re at a genuine inflection point in

history, where a deeper discussion around the future of money, to my mind, is incredibly important.

So we’re thinking about that in the fundamental build of that future from the get-go. I’m

delighted to be joined today by Bradley Jones from the Reserve Bank of Australia and Daniel Lavecky

who is experimenting, building at the coalface of this future of money. And I’m going to kick

off in this absolutely jam-packed 30 minutes with a question first to you, Brad, which is, how

is the Reserve Bank thinking about the future of money?

Brad Jones

There’s probably two points I would make. The highest level point is, in fact, as I announced at

this exact forum a year ago, we with the direction of the Payment System Board have made a strategic

commitment to prioritise our research into wholesale digital money and infrastructure. It’s not

that we’re not doing any work on the retail side, we are, but in terms of prioritising our

resources, that’s really - the wholesale space is really where we see the biggest potential

benefits and the fewest challenges. And it also reflects the fact that when we look internationally

at the countries that are pushing ahead with a retail CBDC, the sorts of rationales that are driving

that decision, we just don’t - don’t really have much resonance here in Australia. For

instance, we think we have a world class retail payment system and so that’s, sort of,

what’s sitting behind that strategic priority around wholesale.

The second point I’d make is actually something that Kate mentioned at the end

there, that resonates with us, and that is as we’re pursuing research into opportunities to uplift

the functioning of our wholesale markets, we are genuine open-minded about the precise functional forms

that can help us to get there. That is, whether it’s forms of money or enhancements to

infrastructure. That’s why we’ve stood up Project Acacia to better understand what mix of

public and private innovation might be needed to get there.

There are, however, probably two guiding principles for us in pursuing this work program.

The first is efficiency, competition and resilience. Those principles are really our north star. And so

wherever the technology lands, it’s got to be consistent with those principles. And the second piece

is wherever our future of monetary arrangements land has to be consistent with monetary and financial

stability. So they’re our - they, sort of, help us give us some structure as we’re working our

way through this space.

Moderator

Thanks, Brad. And before we move to Project Acacia, I was going to ask you, because I did read all

the materials you sent me, there was a comment you made at Intersekt last year which was, it was

reasonable to expect Central Bank money will continue to serve as the ultimate safe settlement asset,

particularly in systemically important markets. Does that remain true in your view?

Brad Jones

Yes.

Moderator

Fantastic. Now, let’s turn to Project Acacia. Now, I think the excellent last session, a lot of

discussion at this Conference around the use cases that are involved, and I’ll ask Daniel about

Canvas’s participation in that. Before we do that, Brad, from your perspective, just talk us

through, where are we at? What are you seeing? What excites you about what you’re seeing? And

talk us through the RBA’s role and position, perspectives on that?

Brad Jones

Project Acacia?

Moderator

Yes, please.

Brad Jones

So just a very quick history lesson. Two years ago we concluded our first pilot and that pilot was

unique in a couple of respects. Number one, we did not prescribe use cases. We literally gave

industry a blank canvas and said, if we were ever to issue a CBDC, what would you, industry, do with

it? And what we learnt from that pilot was a strong disposition to want to explore opportunities

around tokenisation. So that was one of the key learnings. And since then we’ve done a deep dive

into that area and I think our viewers, sort of, hardened that there’s some real opportunities

in that space, if we can get it right. It’s not without challenges but we think there’s

enough there worth continuing to kick the tyres on. So that’s really why Project - so the end

point of the last pilot was really the starting point for this pilot, for Project Acacia. That’s

why we’re focused on exploring different forms of digital money and enhancements to

infrastructure to support the development of tokenised asset markets in Australia.

In July, we were pleased to announce, with our colleagues at the Digital Finance CRC, and

our fellow regulators ASIC and APRA, Treasury, terrific to see them represented here as well, a short

list of industry participants, and it’s also great to see many of those folks here in the audience

as well. We’re now moving from the desktop research phase into the live transaction phase, and that

will see us through the balance of this year. Once we’ve had a chance to reflect on the learnings

from the live transactions, and I want to emphasise there are two streams here, but the larger stream is

actually using a real claim on the Reserve Bank, which is not something that many Central Banks have done

when they’ve explored CBDC. We’ll reflect on those learnings at the end of the year and

communicate back to the public probably late in the first quarter. What we’ve learnt and where

we’re going to go. So that’s what the runway looks like.

Moderator

And sneak peek, Brad, is there anything at the moment that is raising an eyebrow, is piquing your

interest as part of that process?

Brad Jones

The use cases that industry want to explore, I would say accorded with our prize about where the

potentially most interesting opportunities would reside. And I’d sort of categorise those

broadly in two respects. One is ways to uplift the functioning of our fixed income markets. So

we’re seeing use cases in areas like tokenised term deposits, money market funds, government

bonds, but also separately there’s interest in tokenising markets where there’s really very

little, if any liquidity, at all. Tokenised private credit funds, Daniel will speak to in a moment,

also carbon credits, trade receivables. So there’s, sort of - there’s two different streams

here. We ended the project thinking that there were opportunities in both, and what we’re seeing

and hearing from industry probably affirms that that’s roughly about right.

Moderator

Well, what a beautiful segue into you, Daniel. Talk us through your participation in Project Acacia.

Panelist

Hi everyone, I’m Daniel Lavecky. I’m the Chairman of Canvas. We operate in three areas,

which is in assets, in the platforms or the markets that Brad just mentioned, and also the

infrastructure using Canvas Connect, which is our layer to blockchain, it’s privacy-based. And

as part of Project Acacia we wanted to try and use those technologies when we saw the

$19 billion productivity improvements. We wanted to apply those technologies into the

infrastructure space and into the markets area.

In the previous pilot we were quite proud to have made Australian history to do the first

Australian foreign exchange transaction in a tokenised form and that proved the success, in our minds,

about the benefits of the foreign exchange markets. And what we’re looking to do in Project Acacia

is in the debt markets, in the yield markets, in the exchanges. So the first project that we’re

doing is a tokenised private credit fund. We’re partnering with Sanlam, which is a global funds

manager. They have about $140 billion under management. And we’re making a private credit fund

with them that will be investing funds into an Australian credit provider that provides real estate

developer funding. Alceon is a $5 billion fund manager, very well respected. And so the former

payment and the transfer between the two participants is using a CBDC. What’s very exciting there is

because it’s removing a lot of the inefficiencies that go in with the primary purchase and then also

the payment of the interest components.

And then the second element to this is, as Brad mentioned, the market. Normally

investors, there’s not very much liquidity in private credit markets. It’s something

that’s growing rapidly and ASIC is taking a very good look at it, about how to regulate this area.

So by having a market where participants are able to sell 10% of their holding, rather than having to

redeem with the fund manager, creates liquidity for both the investors and then there’s going to be

market makers that will have the ability to buy and sell 24 hours a day, seven days a week. So

that’s really revolutionary in the funds management space. Obviously there’s audibility and

there’s ease of reconciliation.

In the second project that we’re working on is the tokenisation of government bonds,

of Australian government bonds. And obviously that’s not possible today, so we’re actually

purchasing the Australian government bonds. We’re digitising it with a digital wrapper, and then

being able to fractionalise it. Again, the payment will be in the use of the CBDC which is a Central Bank

risk-free payment mechanism. So an alternative to Austraclear that will allow innovation in new areas

that are only just possible now with programmability and the like.

What we’re really excited about with this, it’s all operating on our

privacy-based blockchain. So what means is that all of the participants can see the transactions but

no-one else can. So we as a technology company feel that there is an issue that most regulators and

financial institutions will have significant problems with having all of their transactions, all of their

wallets completely visible to third parties. So our blockchain solves that problem and the RBA will have

a wallet on our - they’ll be minting the eAUD onto - on our blockchain for the participants, the

fund managers and the markets to use as the form of risk-free payment.

Moderator

So, Daniel, completely unscripted, you mentioned two interesting things there about privacy. Firstly,

it’s privacy-enhancing blockchain with certain access and credentialling. But, secondly also,

you’re shedding some light, some further insight into an industry, particularly in private

credit, that is known to be quite opaque. So what insight is it possible to gain with this moving on

to a blockchain?

Panelist

Well, certainly when there’s opaqueness the spreads increase. The profit goes to people that

shouldn’t have it, and we believe that in lowering costs, making things more efficient, more

open in this area, that means our superannuation investments will improve. Costs will decrease and

returns for investments, like superannuation, will increase dramatically. So we think that utilising

this technology will assist, as well as the regulatory controls that are being implemented across the

board in the government, will remove some of those limitations that we’re seeing today in

current structures.

Moderator

And so do I understand correctly that I might see, sort of, transactional activity, and I guess

I’d get price transparency from whatever market it’s trading on, is that right? And that

boosts visibility?

Panelist

That’s exactly right. So as part of Project Acacia, we do have regulatory overview on to our

blockchain. So they have full transparency. And we envisage a world where AUSTRAC, in the same way

monitors all payments within financial institutions will be monitoring our blockchain and other

blockchains because there will be interoperability between chains. To view velocity, potential fraud,

transactions that are alerted. And then we’ll see, within that, like with the ASX, a history of

transactions but anonymised so that the participants don’t need to be known, but certainly where

the market is for a particular product.

Moderator

Fantastic. Thanks. Now, Daniel, one of the areas that we’ve been discussing in sort of years

gone by, you know participating in these pilots, amazing levels of support from regulators, relief

from regulation, but then there’s that awkward transitional window from a pilot into the real

world without necessarily any sort of scaling of regulation. It’s in and you need to comply.

What enabling environment do you need to make this happen, and what’s the delta between that and

what we have?

Panelist

Well, I think there’s three areas, and I’d like to defer policy to Brad, but I think in a

regulatory sense, and my good friend Kate who I’ve known for many years while she was at the NAB

running in blockchain management, I think that we’re starting to see some really good movement

by the government and we’d like to see the completion of that work. So just recently we saw the

Payment Systems Modernisation Act get passed, which means that now the Australian Government has

regulatory controls over new methods of payment, like digital currencies, and that will be useful in

new legislation. And then ASIC is currently running a consultation paper with the community and with

all of participants like ourselves, with a view of updating regulation 225. What that means for all

of us is that, like Kate mentioned, regulatory clarity and that regulatory fog will disappear, and

then the large financial institutions will start to participate.

But on a commercial level, as with most things, I think in this instance it will be

government creating the environment that is rich and is exciting for financial institutions,

technologists and operators to operate just like the Stablecoin Act in the US, the Genius Act, has

implemented a whole wave of innovation. So commercially we’d love to see the RBA work towards

issuing a whole CBDC.

Moderator

So, Daniel, sounds like you’re very optimistic but an important role for government. Brad,

what’s your view on this?

Brad Jones

Just maybe two responses. One is on Project Acacia we made a deliberative decision to ensure that we

had very senior level representation from right across the regulatory communities. So APRA, ASIC and

Treasury have been represented on the SteerCo for Acacia from day one. And the idea there was A, to

help the project itself run smoothly. That was where the regulatory relief, for instance, came in,

for which we’re very grateful from our colleagues at ASIC. But also just to create a bit more

connective tissue and awareness on all sides about the issues here. So that’s the first thing.

The second thing is Australia has a regulatory sandbox. It’s called the enhanced

regulatory sandbox. I don’t think there’s anyone that thinks that that’s perfect and there

is an opportunity for the government, and the government’s well aware of this, and we are very

supportive of an upcoming review into that sandbox. And part of that review, almost certainly, is going

to look at what we can learn from the international experience to reconfigure the regulatory sandbox in

Australia in a way that is, A, more fit-for-purpose and encourages more types of innovation. And, B,

smooths the runway from experimentation to go live. At the moment there’s still quite a gap between

those two settings and so there’s a real opportunity there and the RBA is standing ready to support

future work into that review.

Moderator

I’m sure that’ll be welcomed. You know, my own experience has been that we’ve seen

this, you know, much more positive regulatory environment in the last couple of years, significant

levels of encouragement and it’s wonderful to see. Now, it wouldn’t be the future of money

without - so talking about the broader issues that are affecting money. And, Brad, you gave a speech

last Friday, and there was some very, very important and rather colourful remarks during that

session. And for those who haven’t seen the transcript, I’ll recap some of these, which

really point to some really deep systemic contextual questions for us.

So you talked about the era of the peace dividend being over. A cyber arms race.

Concentration risks in cloud computing. Quantum computing posing risks in the future. Contagion and

herding risks of AI. Disruptions in critical infrastructure that can affect the financial system,

including the electrical grid and telecommunications networks, and even space-based technologies,

including satellites requiring important redundancies. So against that backdrop, as well as, as I learned

your history with the IMF with Deutsche Bank in multiple other markets, what is the role of the

Australian dollar? What do we need to be doing to secure the resilience of our financial system?

Brad Jones

If I can confine my response to the payments system. The way that - so there’s two points

I’d make there. One is the era that we suspect we’re moving into is one that will be

characterised by much more friction and fragmentation at a strategic level, and that is also going to

be right for a lot of disruption. So confronted with more strategic and technological disruption, the

risk is that regulators default back to just wanting to lock everything down. The way that we’ve

been thinking about this, and the Payment System Board has had a number of deep dives into this issue

recently, is where are the opportunities to actually position our payment system and our financial

system more generally, so that it can not only weather more severe storms but could actually benefit

from the disruption that’s potentially coming our way. And so that was the context for the

speech you mentioned.

I spoke about this concept of anti-fragility. Anti-fragility is not just about - not

letting bad stuff happen but actually positioning your system through innovation, more competition, more

dynamism, to actually benefit from disruption. And so that’s where we think the opportunity is. We

don’t think that there needs to be a trade-off between resilience, on the one hand, and innovation

and dynamism on the other. The opportunity for all of us is to find ways to make our system more

resilient by better utilising and harnessing the power of innovation and dynamism.

Moderator

Thanks, Brad. And in relation to the Australian dollar, you know, we see a significant motivator for

stablecoin regulation and activity in the US being the ongoing relevance of the US dollar to the

international market. What about the Australian dollar? Let me clarify that question. So the

Australian dollar, obviously very important in international financial markets. Plays a significant

role, some say an outsized role globally. Is that a priority for the Australian Government?

Brad Jones

Well, the Australian dollar punching above its weight-by-weight, if you characterise that as, say,

just GDP, that’s actually been the case for a number of years. There’s a number of very

good reasons for that. I think fundamentally it comes down to the strength of our institutional

settings. For as long as we have strong, good public policy-making in Australia, we should have every

confidence that the Australian dollar will continue to punch above its weight on the international

stage.

Moderator

Okay. And it wouldn’t be the future of money without talking about the physical form of our

money. We’ve seen some really interesting movements in Australia. Potential contraction of the

use of cash through the imposition of limits, then to a potential mandatory acceptance of cash,

through to AUSTRAC limiting cash in certain instances. What is the role of cash in the future of

money in Australia?

Brad Jones

So the bank’s position has been, I would say, unwavering over a period of time. And that is that

we fully support the Government in its decision to ensure that there is a place - for as long as

Australians want it, that there’s a place for cash in Australian society. So there’s a lot

of work going on now to help ensure that the infrastructure that sits around the distribution of cash

in the country is put on to a stronger footing. That’s really welcome. There’s a lot of

energy being directed to that end but the position of the Reserve Bank has been, I think, steadfast

in that we are fully supportive of the government in ensuring that there’s an ongoing role for

cash in Australia for as long as Australians value it.

Moderator

Thanks, Brad. Daniel, tell me in the last couple of minutes that we have left, what does the deep

future of money look like?

Panelist

Well, we see digital money as a compliment to physical cash. Cash will be with us for a very long

time. It won’t be switched off overnight. But there will be new use cases where we need new

forms of digital cash in order to be able to pay in new ways. So when I look at the future of money,

I think of it as a lot smarter, programmable, that will be able to be integrated in new ways using

the conditions within the contract, the smart contract, so conditionality. In the financial markets,

has KYC and AML been checked and approved? Has compliance been achieved? All of those things can be

baked into the smart contracts that support digital money.

I also see it as frictionless and we demonstrated this at the last CBDC pilot where

sometimes it’s actually faster to take money in cash and put it into a bag, fly to Latin America and

give the person the cash, rather than sending it over the traditional banking rails. And so we see that

it will be frictionless, under a very strong regulatory control, the RBA will continue to have that

regulatory control, compliance and then instantaneous. I’m very excited by that. That when you want

to do something after close of business hours in Australia, you have to wait until the next business day

or potentially on to the Monday. We think that being able to subscribe to private credit funds, or

alternatively do a repurchase agreement at a financial institutional level for a period of only a few

years outside of Australian business hours is a significant improvement in where we are today and the

future of money. And so we see that as a compliment to the current methods of payment, as well as cash.

Moderator

Thanks, Daniel. And does any of that conditionality, that sort of regulatory oversight, you know, to

- I’m sure there’s a better word but does it offend principles of freedom of contract, of

freedom of movement? Starting to see limitations on stablecoin holding proposed in the UK. Because

you are our FinTech person on the panel, does it offend those, sort of, more libertarian principles?

Panelist

Well, as a person who operates within financial markets I believe the regulation and regulatory

controls are always a good thing. I have great confidence in the halls of power in Australia, from my

interactions with the Reserve Bank, ASIC and other organisations like AUSTRAC. The people are very

good. They’re very smart. Very honest. And also looking to make Australia a better place. And if

I see that in a country, in the halls of power making this new regulation happen, I believe that we

won’t need to worry about the libertarian concerns that you might have heard, because I think

that’s just too black and white thinking. It’s much more shades of grey. And if I look at

the history of Australia, we have an egalitarian society supported by a very strong government, and

also public service. And I believe that that will continue into a digital future.

Moderator

How diplomatically and beautifully put. Thank you, Daniel. And to bring us home, Brad, what does the

deep future of money look like for you?

Brad Jones

Two things. One, if you look back at the sweep of the last couple of hundred years, it would be

surprising if over the next 10 or 20, money doesn’t also take a different functional form

and do things that it doesn’t currently do today. That would be observation one. So some things

will change. At the same time, some things won’t. And one thing that won’t is the key - the

foundational role of the Central Bank in supporting and anchoring the monetary arrangements in

Australia.

Moderator

Thank you, gentlemen. Please join me in thanking these remarkable panellists.