Doug Goodwille from Kayne Anderson speaks to Drew Meredith from The Inside Network on market thinkers.
While a surging gold price is on hold as the world adjusts to a Trump presidency, all the factors that saw its price rise more than 50 per during his first term in office – trade disputes, fiscal deficits and geopolitical tensions – are almost certainly guaranteed the second time around.
ANZ completes first carbon trade through central bank digital currency pilot program
The Reserve Bank of Australia’s project looking into a potential central bank digital currency (CBDC) for Australia took a significant step forward last week with ANZ’s completion of a tokenised carbon credit trade through an RBA-run pilot program.
ANZ announced on April 5 that it had successfully traded Australian carbon credit units (ACCUs) through a partnership with Grollo Carbon Ventures (GCV), conducting the transaction on a public, permissionless blockchain.
“ANZ is pleased to be working with GCV to test what’s possible as we explore secure access to the digital economy in a way that also supports the community and environment,” ANZ banking services lead Nigel Dobson said. “When applied to carbon markets, tokenisation has the potential to improve efficiency and transparency, reduce risk and preserve the unique characteristics of underlying projects to incentivise investment in climate solutions.”
Lorenz Grollo, CEO of GCV, said the use-case project was an “exciting research opportunity” around investment in innovative sustainability solutions. “As more organisations implement net-zero transition plans, the demand for nature-based assets is expected to grow significantly,” he said.
Piloting an Australian CBDC
ANZ is one of 14 organisations signed up to the CBDC pilot program, which the RBA is running in collaboration with the Digital Finance Cooperative Research Centre (DFCRC) to explore potential use cases and economic benefits of an Australian CBDC. Last year, ANZ also executed a payment using the first-ever bank-issued Australian-dollar stablecoin, A$DC.
“For this use case, ANZ and GCV sought to test tokenisation of real-world, nature-based assets, starting with ACCUs,” the bank explained in a statement announcing the trade. “To do this, ANZ tokenised existing ACCUs and issued its stablecoin, A$DC, enabling GCV to purchase tokenised ACCUs with settlement occurring in near real-time via ANZ smart contracts.” It used the pilot CBDC as a risk-free asset to support the A$DC issuance.
The trade “demonstrated the use of digital assets to reduce settlement time and help mitigate settlement-related counterparty risk”, ANZ said.
According to the RBA, the project will see select industry participants like ANZ demonstrating potential use cases for an Australian CBDC using a limited-scale pilot CBDC that represents a real claim on the reserve bank. Other participating organisations include Commonwealth Bank of Australia, Mastercard and the Australian Bond Exchange.
“We are delighted with the enthusiastic engagement by industry in this important research project,” RBA Assistant Governor Brad Jones said in announcing the use case providers.
“It has also been encouraging that the use-case providers that have been invited to participate in the pilot span a wide range of entities in the Australian financial system, from smaller fintechs to large financial institutions. The pilot and broader research study that will be conducted in parallel will serve two ends – it will contribute to hands-on learning by industry, and it will add to policymakers’ understanding of how a CBDC could potentially benefit the Australian financial system and economy.”
Dilip Rao, CBDC program director at the DFCRC, said the variety of proposed use cases covers numerous issues that are potentially addressable by a CBDC, such as atomic settlement of transactions in tokenised assets.
“The process of validating use cases with industry participants and regulators will inform further research into design considerations for a CBDC that could potentially play a role in a tokenised economy.”
