Firms Claims Australian First Atomic Settlement
Posted by Colin Lambert. Last updated: July 26, 2023
Australia’s Imperium Markets and Fireblocks say they has successfully achieved an atomic settlement as part of the Reserve Bank of Australia’s central bank digital currency (CBDC) experiment. The firm says two banks, believed to be Westpac and Commonwealth Bank, issued and invested in certificates of deposit.
Imperium says the pilot shows that the technology already exists to achieve significant benefits for the Australian economy, but choosing the right technology for the circumstance is critical for regulated markets. It adds that some current market processes and practices will not be suitable nor required in digital markets.
Further, it observes that regulation will need to change to support a new digital economy, which needs to be safer, more secure, more efficient, more transparent, and more competitive with access to technology for all participants. Finally, the firm says collaboration is key for the successful safe transition to digital markets. The onus is on market operators, market participants, regulators and governments to work together so that Australia has robust capital markets that are fit for the future.
“Our use case successfully demonstrated the integration of our trading and issuance technology with the central banks to achieve ‘atomic’ settlement using CBDC issued by the RBA,” says Rod Lewis, chair of Imperium Markets. “Fireblocks, an enterprise platform to manage digital asset operations and build businesses on the blockchain, was also part of the use case and together we have achieved a first for regulated markets in Australia.
“The wholesale money markets and debt capital markets play a vital role in funding the Australian economy,” he continues. “Atomic settlement (instantaneous swapping of an asset for payment) will remove settlement, counterparty and operating risks from those markets and can create efficiencies around reserving capital, legacy system costs and market liquidity. We’d like to thank Westpac and the Commonwealth Bank for their participation and assistance in what has been a truly innovative development for the sector.”
Lewis says Imperium will continue its own pilot programme with partner R3, using the latter’s Corda distributed ledger technology. “Atomic settlement is one part of the solution,” he says. “Imperium’s technology infrastructure includes DLT which can provide benefits as they relate to the issuance and secondary trading of securities, digital payments, digital custody, digital registry, and cyber security.
“Now we have completed the RBA Pilot, we are looking to collaborate with the market and regulators to test all the benefits of DLT, not just for settlements and payments.”