Australia eyes 1% GDP gain from digital finance

The Australian Digital Finance Cooperative Research Centre (DFCRC) has released a 166-page report outlining the possible productivity gains and economic windfall available to Australia through innovation in digital finance. The report, informed by both the DFCRC's research and industry consultation, paints a simple picture: Australia is sitting on a possible AUD $24 billion per year opportunity if it embraces digital finance innovation at scale.

The report states that whilst Australia has all the right characteristics - world-class payments infrastructure and deep capital markets - the window to capture a competitive advantage is narrowing and that we are currently on track to realise less than 5% of potential economic gains by 2030 unless regulatory clarity and industry coordination improve. Regulatory uncertainty, licensing ambiguity and fragmented adoption remain our strongest blockers to progress.

The DFCRC categorises the largest economic opportunities into three "core" buckets:

1. Better Markets - AUD $10 billion p.a.

2. Better Payments - AUD $8 billion p.a.

3. Better Assets - AUD $6 billion p.a.

Together, these represent roughly 1% of national GDP in upside.

Better Markets

The DFCRC focuses on how trading, clearing and settlement infrastructure could be simplified and made more efficient. The report notes that the majority of potential market-level gains (AUD $10 billion per year) derive from two structural changes: (1) real-time atomic settlement; and (2) improved mobility of collateral.

Atomic settlement removes the time gap between execution and settlement which thereby reduces counterparty exposure, eliminating settlement failures and otherwise reducing the amount of margin or collateral that would be posted purely to manage such settlement risk. This is particularly relevant in public debt and equity markets, where settlement failures and associated compensation mechanisms (such as securities lending arrangements to avert failed delivery) impose heavy costs.

Real estate markets are also analysed, but here the gains arise from operational efficiencies rather than trading throughput. Tokenised title systems and automated settlement are methods that the DFCRC states could reduce conveyancing complexity and settlement delays, which is estimated to comprise roughly a third of the total cost base for conveyancing functions.

Across these market segments, the DFCRC's position is consistent: measurable benefits arise not from digitising existing assets, but from replacing legacy workflows with modern infrastructure that is capable of instant settlement. Without these structural changes, tokenisation delivers only marginal improvements.

Better Payments

The payments analysis is similarly pragmatic. The DFCRC finds that the bulk of Australia's potential gains (AUD $8 billion per year) are concentrated in cross-border payments and foreign exchange (FX) settlement, rather than domestic retail payments. Australia's domestic system is already relatively efficient following two decades of regulatory reform and the rollout of the New Payments Platform. By contrast, the international environment remains dependent on correspondent banking chains, manual reconciliation and multi-day settlement windows.

The report’s modelling shows that replacing multi‑intermediary cross‑border workflows with direct settlement using tokenised money, whether wholesale CBDC, stablecoins issued under Australian regulation, or tokenised bank deposits, would materially reduce correspondent bank charges and FX spread costs. FX markets are highlighted as a major source of potential economic surplus because of their exceptionally high turnover. Even modest reductions in transaction costs (e.g., through automated market‑maker mechanisms or consolidated liquidity pools) translate into billions of dollars in annual savings.

A recurring theme throughout this section is that significant improvements to the payment system depend on the availability of trusted, programmable settlement assets. Without regulated tokenised money, the supporting infrastructure required to unlock many of these economic benefits cannot operate at scale. In this respect, the DFCRC highlights that payments reform and financial market reform are codependent.

Better Assets

The DFCRC states that gains (AUD $6 billion per year) are to be made from making assets more functional, rather than merely digitising them. The report outlines three priorities: (1) collateral mobility; (2) lifecycle automation and on‑chain credit/liquidity; and (3) embedded compliance.

Tokenised collateral can be pledged and substituted effectively instantly, reducing funding spreads and freeing capital in repurchase agreements (repo), derivatives margining and securities lending. Encoding bond lifecycle events (issuance, coupons, redemptions) into smart contracts cuts recurring registry and servicing costs that currently rely on manual workflows. Extending these rails to collateralised lending, invoice finance and intraday repo lowers intermediation costs using conservative Australian benchmarks.

Finally, programmatic KYC/AML and machine‑readable records reduce labour‑intensive compliance and improve transparency in opaque markets (e.g., corporate bonds, private credit). The report also flags tokenised government bonds as a keystone asset for settlement, collateral and liquidity, supporting both public and private tokenised markets.

Conclusion

The DFCRC's report shows that Australia is at a critical juncture. A recurrent theme throughout the report is the need for regulatory clarity. This sits uneasily with the current Australian landscape. Parliament is progressing digital asset legislation, while ASIC's latest guidance suggests substantial overlap with the existing financial services regulatory regime. Meanwhile, significant payment sector reforms are in train. Overlapping or inconsistent regulations threaten to put a brake on the digital finance revolution. The outcome, the DFCRC implies, is delay and lost value. The path forward requires careful regulatory design and fit for purpose rules in order to seize the economic gains identified by the DFCRC.

Written by Steven Pettigrove and Luke Higgins