Building an Interoperable Future for Digital Money

The strategic question is not which form of digital money to back, but whether value can move safely. Insights from Cuscal’s Intersekt panel.

Key takeaways

• No single form of digital money will win. Stablecoins, tokenised deposits and central bank digital currency are likely to coexist, each providing different utility.

• Interoperability is the strategic requirement. Value has to move safely between forms of digital money,  platforms and payment systems.

• Tokenised deposits extend trusted bank money. They bring programmability to commercial bank deposits rather than displacing them, and that direction now has regulatory backing.

• The distance is from pilot to scale. Project Acacia demonstrated the benefits with real money and real assets. Production and scale depends on interoperability, resilience, governance and integration.

• Readiness is broader than acceptance. Receiving, validating, moving, converting and settling new forms of value safely takes preparation well before the first payment arrives.

Asked what organisations should take from the session into their strategy and planning, Rob Allen, Executive Director of Icon Future Technologies, answered with a question of his own. What will you do when a customer wants to pay in a stablecoin, or another form of digital money?

It was one of the defining questions of ‘Beyond Stablecoins: What Will Power the Next Generation of Money?’, a session at Intersekt on 3 September moderated by Freya Smith, Cuscal’s Chief Client Officer, with Nathan Churchward, Cuscal’s Head of Product Solutions and Innovation, Hannah Glass, Special Counsel at Ashurst Perkins Coie, and Rob Allen, Executive Chair, ICON Future Technologies. How will institutions ensure they’re prepared? Accepting a new form of money is the visible part of a larger requirement: being able to receive it, validate it, move it, convert it and settle it safely, alongside everything an organisation already runs.

The industry has spent two years asking which form of digital money will win. The more useful question is how the several forms now emerging will work with each other, and with the existing payments and settlement systems that already exist. No single form is likely to prevail. The strategic requirement is interoperability.

For Cuscal, the question is not which form of digital money succeeds. It’s how banks, fintechs and payment providers can settle multiple forms of digital money safely on shared infrastructure, without each organisation having to build its own network. It is a problem Cuscal has met before. Since 1966, Cuscal has connected institutions to shared payments infrastructure, with a history of firsts that runs from Australia’s first ATM to the first clients live on the New Payments Platform. In each case the innovation was focused on giving banks, mutuals and fintechs speed to market and access to infrastructure so they can invest their capital in the areas where they genuinely differentiate: product, distribution and customer experience. Tokenised money is the next significant infrastructure transition.

More forms of money

Stablecoins have dominated the global conversation because they are visible and already in live use in some markets. They are one form among several forms of digital money. Roughly US$300 billion of them exist globally, a fraction of a per cent of the money already in circulation, and they sit within a wider evolution that includes tokenised deposits, wholesale central bank digital currency and other digital stores of value. What stablecoins have done is make digital money legible to a mainstream audience. What they have not done is settle which forms of digital money will carry the most value, or how those forms will connect.

Allen’s taxonomy of money gives the field its shape. It begins with the three forms most people would name, cash, commercial bank money and central bank money, and adds two that rarely appear in the same sentence: corporate money, the loyalty points and reward balances that businesses already issue and that are tokenised in all but name, and what he calls computer money, the tokens that software agents will hold and spend on behalf of the people and organisations they act for. Each has a different issuer, a different claim behind it and a different job. It is not an either-or, and it is unlikely to become one.

Tokenised deposits sit at the centre of that field for a particular reason. They are not a rival to stablecoins, and they are not a replacement for retail deposits. They are the bank account, with programmability added: the same claim on the same regulated institution, now able to carry conditions, move in real time and settle against other tokenised value. That was the case Cuscal’s Nathan Churchward put to the room.

‘They bring programmability to a bank account, and everyone in this room needs a bank account — you want to have an account that can actually serve your purposes.’

That direction now has official backing. The Reserve Bank has been explicit that the two-tier structure of the monetary system, with central bank money providing the foundation and commercial bank deposits sitting above it, is the intended architecture for the next phase of innovation, and the prudential regulator is now engaged on the tokenisation of bank deposits. For the institutions that hold those deposits, the implication is the opposite of displacement.

Tokenised deposits do not inherently cannibalise bank retail deposits. If properly structured, they are simply a new digital representation of an existing deposit liability of an ADI. The Australian market is developing through a wholesale, bank-centric and regulator-supervised pathway, exemplified by Project Acacia and the work on interoperable commercial bank deposit tokens. This keeps the initial development close to regulated financial institutions, wholesale market infrastructure and central bank money. By contrast, the US has created a nationally scalable framework for non-bank payment stablecoins, backed substantially by cash and government securities. That model offers a more direct pathway for deposits to migrate from banks to private stablecoin issuers. .

Where the value is likely to appear first

The demand for tokenised money is not coming from the technology. It is coming from the places in payments, settlement and treasury where money, data and obligations still travel separately, and where that separation carries a cost: settlement cycles that trap capital for days, reconciliation that depends on manual effort, liquidity held against risks that atomic settlement could remove, and controls applied after the fact rather than built into the transaction.

Project Acacia gave those benefits their first Australian evidence. The research program, led by the Reserve Bank and the Digital Finance Cooperative Research Centre and concluded in May, ran 20 use cases across 57 industry participants, most with real money and real assets. Settlement cycles were compressed, collateral moved more freely and asset lifecycles were automated end to end. None of those outcomes is automatic. Each depended on the infrastructure, controls and participants around it, which is why the pilots demonstrated the potential rather than the product.

The first production value is likely to appear in places customers never see: treasury flows, the movement of value across ecosystems, and marketplace payments where multiple parties sit in nested relationships that today require manual reconciliation. Agentic commerce is a further signal of the direction of travel. Hannah Glass closed the panel by pointing to a session on the subject running at the same time and drawing the connection directly:

‘Agentic commerce needs tokenised money.’

Software agents transacting on behalf of people and businesses will need money that can carry conditions and settle at machine speed. It is an emerging use case that further adds to the sense that preparation cannot wait for the market and retail use cases to fully form.

From pilot to scale

The mechanisms have been demonstrated. What has not been demonstrated is production at scale. The distance between the two is where the substantial work sits: interoperability across new and existing infrastructure, the resilience and security of platforms that have not yet carried systemic volume, governance across participants who do not share infrastructure today, and integration with everything an institution already operates.

Underneath those is a coordination problem. Financial systems run on strong network effects, and those effects are strongest when the change involves moving from one record-keeping system to another. A group of institutions can all see the collective benefit of shared infrastructure and still find the individual step too costly, because the benefit only arrives once everyone else has moved too. Economists call this a first-mover disadvantage. Allen’s version was more vivid: he is old enough to remember AOL and the early years of Hotmail, when an email address was tied to a network and a contact book on one service could not be read from another. That, he says, is where blockchains and distributed ledgers are now.

‘One bank running a private network with a deposit token is not going to be very exciting to the majority of the fintech founders in this room.’

Production inside a single institution is possible, but the potential is limited until liquidity can flow between networks and the systems the rest of the economy runs on. It is in coexistence that the value lies. Tokenised infrastructure will work alongside accounts, cards, the NPP, central bank settlement systems and the controls attached to all of them, and the institutions that benefit will be those able to move value across that whole landscape rather than within one part of it.

Two remedies emerged, and they point the same way. Integrate new infrastructure tightly enough with existing systems that the move does not feel like a leap. And provide the connection through shared, neutral infrastructure rather than proprietary networks, so that participation does not depend on every institution building its own bridge. That is the unique role Cuscal has played in each previous generation of payments transitions,: not selecting a winning form of digital money, but identify an important infrastructure shift early, invest in the connection layer, and then make the capability accessible to institutions that could not necessarily justify building it independently. Cuscal’s focus is on how Cuscal can help our clients participate in future infrastructure safely and early. That means working through interoperability, regulated settlement, liquidity, compliance, and controls. It also means ensuring the emerging infrastructure is not shaped only around the economics of the largest institutions or closed networks.

The constraint is not the rulebook

The standard industry line is that regulation lags innovation. However, Glass, who sat on the Project Acacia Industry Advisory Group and sits on the Standards Australia committee developing blockchain and distributed ledger standards, offered a more optimistic view. Project Acacia gave participants a sandbox in which to experiment without needing to resolve every legal question in advance. Commercialisation means working through the framework as it stands and as it evolves, and that framework is more accommodating than its reputation.

Australian regulation is technology-neutral: the rules attach to what a service does, not how it is built. Organisations often assume a familiar term describes conventional systems, and conclude a new approach sits outside the framework when it might not. There is, she suggested, a great deal more that can be done now than most organisations think. The discipline is identifying a genuine gap in the law as opposed to a perceived uncertainty, and then engaging.

Regulatory certainty is one condition of adoption, and it is actively being worked on. The others are the ones boards ask about first: resilience, security and financial crime controls. Tokenised money does not remove those obligations, and in a system where value moves faster and settles with finality, they matter more. The opportunity is in how they get built. Almost every new obligation that reaches a payments business today, scam prevention among the most recent, arrives as an overlay applied to systems designed before the obligation existed. Tokenised deposits offer a chance to reverse that: to embed identity, limits, screening and conditional release into how payments are constructed, so the system responds to emerging threats by design rather than by patch. Trust in the outcome depends on that work being done well, and done first.

The window, and what to do inside it

The morning of the panel, the Reserve Bank released a consultation on how Australia’s core settlement infrastructure should adapt to support a tokenised financial system, open to industry until the end of October 2026. It published a page tracking all ten post-Acacia initiatives, with their purpose, lead agency and status. And it noted that expressions of interest to join the new tokenisation advisory group, opened a few weeks earlier, had exceeded 120, against 57 organisations across the whole of Acacia.

Those are the mechanisms through which the market architecture will be set, and they are open. Cuscal has been inside that process since the pilots, as one of the organisations that distributed the pilot wholesale central bank digital currency, and is in the industry groups now forming around what comes next. Its interest is the one it has always had: the shared, trusted infrastructure through which its clients, and their customers, can take part.

So what next? The panel’s advice was to start with the problem rather than the technology, and not with a preferred form of digital money. That means identifying the use cases where the separation of money, data and obligation carries real cost today; the forms of money those use cases will require; the interoperability dependencies between them and the systems already in place; the controls that have to be embedded rather than overlaid; and the infrastructure partners through whom participation is possible without building everything alone. Understanding those dependencies, and the relationships between them, takes longer than the market will wait. Every organisation will eventually be asked Allen’s question “Can I pay in a stablecoin, or another form of digital money?

Preparing for digital money?

Whether you’re evaluating stablecoins, tokenised deposits or other emerging forms of digital value, the strategic challenge is interoperability. Cuscal is helping shape Australia’s tokenised money ecosystem and building the trusted infrastructure that enables financial institutions to participate without creating new closed networks.

Talk to Cuscal about preparing your payments, settlement and treasury infrastructure for the next generation of money.