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eAUD pilot continues, Australia launches first FX transaction using CBDC

The FX transaction was a part of Australia's CBDC pilot, which will generate its final findings and results on June 30, 2023

Shashank Bhardwaj
Published: May 18, 2023 04:25:48 PM IST
Updated: May 18, 2023 04:27:17 PM IST

eAUD pilot continues, Australia launches first FX transaction using CBDCImage: Shutterstock

In the midst of a growing interest of countries worldwide to explore more in the field of and launch digital currencies issued by their central banks, Australia made its first successful foreign exchange transaction using its CBDC or central bank digital currency- the eAUD.

This was a part of Australia’s live pilot of its potential CBDC. 

On May 17, 2023, eAUD was traded by crypto fund managers DigitalX and TAF Capital against the stablecoin USD Coin as per Canvas, which is a blockchain infrastructure provider.

Canvas reported that compared to the traditional foreign exchange and remittance networks which were “slow, expensive and prone to errors”, the FX transaction using eAUD was instantly settled.

As the country explores the various possible use cases for a central bank digital currency, it conducts a series of tests of which the FX trade was a part. The RBA or the Reserve Bank of Australia (RBA) and the DFCRC or the Digital Finance Cooperative Research Centre, which is a financial research institute, collaboratively launched this pilot program.

Hinting at the potential benefits of using the CBDC over fiat currencies and the traditional settlement platforms, Canvas’ test explored the usage of eAUD in tokenised FX settlements.

The FX transaction was carried out on Canvas’ “Connect”, which is an Ethereum layer 2 blockchain, using StarkWare’s zero-knowledge (ZK) roll-up technology.

The trade drew applause from Canvas’ CEO David Lavecky; his take on it was that the digital dollar had the potential to address the current challenges in FX and remittance markets. He added that it could help improve transaction times, reduce fees and provide more open access.

A pilot test was done in April to trade carbon credits using CBDC from the Australia and New Zealand (ANZ) bank, in which ANZ backed its A$DC stablecoin using eAUD for trading the credits on a public blockchain. The settlement was reported to have happened “in near real-time.”

Offline payments, distribution, custody, automation of taxes, uses in “trusted Web3 commerce” and livestock auctions are some of the other use cases that are being tested.

The pilot which began on March 31, 2023 is set to finish on May 31, 2023. An assessment report of the various use cases is to be published on June 30, 2023.

Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash

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