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Australia advances testing of wholesale central bank digital currency

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Australia’s central bank, the Reserve Bank of Australia (RBA), announced on Thursday it is advancing its exploration of a wholesale central bank digital currency (CBDC) through “Project Acacia,” which involves real money and assets for the first time. The project will test 19 pilot cases across multiple asset classes and five proof-of-concept trials with simulated transactions.

The pilots cover fixed income, private markets, trade receivables, and carbon credits. Settlement assets tested will include CBDCs, stablecoins, bank deposit tokens, and innovative uses of commercial banks’ existing deposits at the RBA. The trials will use platforms like Hedera, Redbelly, R3 Corda, and Canvas Connect over the next six months, with findings expected by mid-2026.

Brad Jones, RBA assistant governor overseeing the financial system, said the initiative aims to evaluate how innovations in central bank and private digital money, alongside payments infrastructure, can enhance the functioning of wholesale financial markets in Australia.

The RBA is focusing solely on wholesale applications, having determined there is no significant economic benefit for a retail CBDC at this stage. Expected advantages include reduced counterparty and operational risks, improved collateral efficiency, greater transparency and auditability, and lower costs for institutions and customers.

Japan Accelerates Move to Cashless Society, BOJ Pushes for Payment Innovation

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Japan is rapidly shifting towards a cashless society, prompting the Bank of Japan (BOJ) to intensify efforts to modernize the country’s payment systems. Cashless payments accounted for 42.8% of transactions in 2024, surpassing the government’s 40% target a year ahead of schedule and marking a significant jump from just 13.2% in 2010.

Traditionally reliant on physical currency, Japan’s growing cashless trend is pushing policymakers to adapt to changing consumer preferences, including the possible introduction of a central bank digital currency (CBDC). While no decision has been made on issuing a digital yen, the BOJ began a pilot program in 2023, collaborating with private firms and the government on its design and implementation.

BOJ Executive Director Kazushige Kamiyama highlighted concerns over potential future declines in banknote usage due to digitalization, emphasizing the need for a retail payment system that is efficient, accessible, and secure. Deputy Governor Shinichi Uchida echoed this, noting that a CBDC could become a crucial infrastructure for Japan’s payment landscape, but said cash is unlikely to disappear soon.

Uchida also warned that the yen’s dominance as a payment instrument depends on public trust in the BOJ’s ability to maintain price stability. Should confidence falter, alternative forms of payment, such as cryptocurrencies, could gain ground.

The focus on CBDCs is part of a global trend amid growing cryptocurrency use and moves by other nations. While the U.S. government banned the Federal Reserve from issuing a digital dollar earlier this year, the European Central Bank advocates for a digital euro to reduce reliance on U.S. payment providers. Meanwhile, China aggressively promotes its digital yuan internationally, with transaction volumes more than tripling from mid-2023 to mid-2024.

Japan’s push signals its determination to modernize payments and keep pace with global developments in digital currency and cashless transactions.

BIS Digital Currency Chief Cecilia Skingsley Steps Down Early for Swedish Government Role

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Cecilia Skingsley, the head of the Bank for International Settlements (BIS) Innovation Hub, is stepping down two years before the end of her five-year term to return to Sweden for a government appointment, the BIS announced.

Skingsley, a former deputy governor of Sweden’s Riksbank, will become County Governor of Stockholm County next month. She began her role at the BIS in September 2022, leading its work on central bank digital currencies (CBDCs) and other fintech innovations.

Departure Comes Amid BIS Strategic Shift

Her departure coincides with broader structural changes at the BIS, ahead of incoming General Manager Pablo Hernández de Cos, who takes over in July. Reports earlier this year indicated plans to scale back the Innovation Hub, which had grown rapidly since its 2019 launch, expanding to seven global financial centers including London, Singapore, and Hong Kong.

“Under Skingsley, the Innovation Hub made great strides toward fulfilling our strategic goal of helping central banks face the challenges of the future,” said Agustín Carstens, the BIS’s current chief.

CBDC Landscape in Flux

Skingsley’s exit also follows increasing geopolitical tension around CBDCs. Notably, the BIS abruptly withdrew last year from a high-profile CBDC pilot project with China and other Asian central banks, raising questions about internal policy shifts and global alignment.

CBDCs remain a strategic frontier for central banks, with dozens of jurisdictions exploring digital versions of national currencies amid competition from private stablecoins and global digital finance trends.

Interim Leadership and Succession Plans

  • The BIS said Deputy General Manager Andréa Maechler, formerly of the Swiss National Bank, will serve as interim head of the Innovation Hub.

  • A formal recruitment process for Skingsley’s successor will be announced “in due course.”

Skingsley’s early exit may influence how central banks recalibrate their digital currency strategies in the face of evolving regulatory, technological, and geopolitical pressures.