Australia has successfully completed its first-ever foreign exchange transaction using eAUD, marking an exciting milestone in the development of the country’s potential central bank digital currency (CBDC). The transaction was conducted as part of a live pilot run by the Reserve Bank of Australia (RBA), together with the Digital Finance Cooperative Research Centre (DFCRC), in response to the growing interest in central bank-issued digital currencies worldwide.
The eAUD transaction saw crypto fund managers DigitalX and TAF Capital trade against the stablecoin USD Coin (USDC) on May 17 local time. Blockchain infrastructure provider Canvas said the exchange was settled instantly, a significant win over traditional FX and remittance networks, which it referred to as “slow, expensive and prone to errors.”
This recent foreign exchange trade is part of a series of tests currently being conducted to explore possible use cases for the eAUD in tokenized FX settlements. The successful pilot suggests that the digital currency could present clear advantages over fiat currencies and existing settlement platforms.
According to Canvas’ CEO, David Lavecky, the trade is “historic” as it demonstrates the potential benefits of using CBDCs like eAUD in tokenized FX transactions on privacy-focused Layer 2 networks and blockchain-based financial markets applications.
The transaction took place on a decentralized app hosted by Canvas’ “Connect” network — an Ethereum layer 2 that employs StarkWare’s zero-knowledge (ZK) roll-up technology. Among the many advantages of a digital currency like eAUD is the potential to address various challenges in FX and remittance markets, including faster transaction times, reduced fees, and increased accessibility.
Australia isn’t alone in testing the waters of CBDCs. In April, Australia and New Zealand (ANZ) Bank conducted a pilot test of eAUD to back their A$DC stablecoin in trading carbon credits. The transaction was settled “in near real-time” on a public blockchain, further showcasing the promising features of CBDCs.
The ongoing eAUD pilot, which began on March 31, is also examining other use cases, such as offline payments, distribution, custody, tax automation, usage in “trusted Web3 commerce,” and even livestock auctions. The test phase is set to wrap up on May 31, followed by a comprehensive report and assessment of various use cases to be published on June 30.
As countries around the world explore CBDCs, it’s crucial to consider both the potential benefits and drawbacks of implementing these digital currencies in broader contexts. With successful live pilots like Australia’s eAUD, the future of CBDCs is starting to take shape – and it seems we may be moving closer to a world where digital currencies play a larger role in our financial systems.
Source: Cointelegraph
