CBDC: Canvas Successfully Completes First Foreign Exchange Transaction Using Australian eAUD, Trials Continue

The emergence of digital currencies has led to newer cryptocurrency products, and central bank digital currencies (CBDC) are at the center of this discussion. One of the latest countries to take advantage of digital currencies is Australia, which has just reached a major milestone in launching a CBDC, with Canvas, a blockchain startup, announcing the successful use of the Australian CBDC to execute a foreign exchange (FX) transaction.

Australia Records First FX Transaction With CBDC

Canvas announced on Thursday, May 18, 2023 that it had successfully facilitated the first foreign exchange transaction using the Australian CBDC. In a press statement released on its website, the global fintech company disclosed that the transaction was executed as part of a series of pilots by the Reserve Bank of Australia (Australia’s central bank) and Digital Finance Cooperative Research Centre (DFCRC) to launch a CBDC – the eAUD. The milestone FX transaction was performed between digital and TAF Capital on Wednesday, May 17, where Canvas’ Connect platform, built on the Ethereum network, was used to execute the trade. The platform provides users with confidentiality, scalability, instantaneous completion time, and cheaper transaction costs. Moreover, the blockchain firm promises to leverage the ZK (zero knowledge) Layer 2 technology to improve the present-day FX system.

According to David Lavecky, CEO of Canvas Digital, the eAUD, as a CBDC, has the potential to resolve pertinent issues in the foreign exchange and international remittance markets by improving transaction times, eliminating market inefficiencies, and reducing fees. Canvas is one of the 15 selected use case providers in the RBA eAUD project, with other providers including ANZ BANK, The Commonwealth Bank of Australia, Intuit & MasterCard.

Are CBDCs Really Worth The Hype?

A CBDC is a digital form of a country’s fiat currency issued by the nation’s central bank. This digital asset is similar to cryptocurrencies, except that its value is typically tied to the country’s fiat currency. Central banks are experimenting with CBDCs to improve local economies and perhaps ease cross-border payments. Despite the shiny potential of CBDCs, not everyone is on board with the idea of creating a “competitor asset” for cryptocurrencies. According to a Financial Times piece earlier this year, “CBDCs are a huge undertaking and are not worth the costs and risks.”