‘Tokenised’ assets could save markets $17b a year: RBA

afr.com:

The Reserve Bank of Australia says creating real-world financial assets in a “tokenised” form could unlock billions of dollars in annual savings for banks and other financial institutions by streamlining settlement processes and automating registries.

The RBA is in the early stages of planning for a project to assess how different forms of digital money, including “central bank digital currency” (CBDC) and bank-issued stablecoins, could support the development of tokenised asset markets in Australia.

RBA assistant governor (financial systems) Brad Jones.  Peter Rae

A tokenised asset is a digital version of a physical one which allows it to be programmed and traded on blockchain platforms. This could provide an update to existing markets which use legacy financial infrastructure that is slow and expensive, or for new markets for carbon or biodiversity credits.

RBA assistant governor Brad Jones told The Australian Financial Review Crypto Summit the bank had made hypothetical estimates of the cost savings that could be delivered to Australian companies and financial institutions by real-world asset tokenisation.

It suggested potential savings of up to $13 billion per year for issuers in the Australian capital markets, including around $6 billion for equities, $4 billion for corporate debt, and $3 billion for government debt.

These could come from reducing the cost of capital and transaction costs. The calculations are based on a fraction of the benefits which emerged when trading went electronic, the RBA said.

Estimated cost savings for Australian financial markets sit in the range of $1 billion to $4 billion per year. These could be created by tighter bid-ask spreads, reflecting higher trading volumes as tokenised assets