The Australian CBDC pilot project accomplished cross-border settlement. Monoova’s CTO Nicholas Tan will demonstrate at an exclusive Sydney conference. CBDCs may affect cross-border transactions and digital finance.

Participants in the Australian Central Bank Digital Currency (CBDC) pilot project were invited solely to a conference conducted in Sydney by the Reserve Bank of Australia (RBA) and the Digital Finance Cooperative Research Centre (DFCRC). In a live demonstration, Monoova’s CTO Nicholas Tan used the pilot CBDC to accomplish the first successful cross-border settlement.

The pilot was started last year to investigate the possible applications and financial gains of an Australian CBDC. 14 use cases were announced by the RBA in March after being chosen from 142 proposals made by banks, fintechs, and payments providers.

The use case for Monoova looks at cross-border custody and settlement. The trial has been set up with NexPay, a current FX client. In the $30 billion education sector, NexPay is a specialized provider of inbound remittance services for overseas students.

The domestic leg of an incoming FX remittance payment was settled in front of the conference attendees as part of a live demonstration.

A client in Japan sent NexPay a AUD payment, which Monoova transferred to NexPay’s test CBDC wallet. It gave undeniable evidence of the $25,000 RBA-backed payment’s balance. The domestic portion of the transaction was represented by this phase. It was also the first time the pilot CBDC was used to settle a legitimate cross-border payment.

Australian FX transaction improvement

Tim Stanley, head of product at Monoova, stated, “We have been operating our use case on a pilot ecosystem blockchain to demonstrate the value we can bring to our clients. “We’re incredibly proud to have been a part of the project pioneering the use of CBDC in Australia.”

The pilot allows us to find potential ways to increase the speed and transparency of FX transactions into Australia while lowering counterparty risks, according to Stanley. “We believe that extending our exposure to blockchain technologies will be extremely valuable. Our goal is to aid in the research process. Additionally, we want to show that we are dedicated to innovation and thought leadership in the global payments business.

“For instance, a client of Monoova FX might need to transfer US dollars to Australia. Normally, a client would convert US dollars into fiat Australian dollars to complete this transaction, and Monoova would then engage with a banking partner to make the payout or keep the monies on account until the client issued disbursement instructions.

In the CBDC trial, Monoova offers clients Australian dollars in pilot CBDC on its platform rather than Australian dollars in fiat currency as a balance.

“This enables us to settle any monies that arrive in Australia promptly. On the blockchain, customers can independently check account balances rather than relying on information from intermediaries. Clients can do so without taking on counterparty risk if they need to retain money for a while before making payments, according to Stanley.

Cross-border transactions have changed

“Our collaboration with Monoova in this innovative CBDC trial has allowed us to delve into the immense potential of blockchain technology for international education remittance payments,” said Piew Yap, CEO of NexPay. The Monoova platform’s ability to transfer and track CBDC balances improves security and transparency. This is essential for the numerous settlements into Australia that NexPay coordinates. This creative application of the eAUD heralds a paradigm shift in international trade.

Even though the RBA has not decided whether to issue a CBDC, optimism is high over the prospects the program offers to Monoova.

“A CBDC opens up new horizons for us,” Stanley said in conclusion. In trust-based use cases in regulated industries, we can scale down counterparty risk. Furthermore, compared to international SWIFT payment rails, where money passes via a number of intermediary institutions, we may conduct FX more effectively and transparently. In general, we can continue to be at the forefront of payment innovation.

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