Monoova successfully executes first real-world, cross border settlement utilising Australian CBDC
On Friday, the Reserve Bank of Australia (RBA), in collaboration with the Digital Finance Cooperative Research Centre (DFCRC), held an invite only conference in Sydney for participants in the Australian Central Bank Digital Currency (CBDC) Pilot. In a live demonstration, Monoova’s CTO Nicholas Tan, successfully completed the first real-world, cross border settlement utilising the Pilot CBDC.
The pilot, announced in March this year, was established to explore potential use cases and economic benefits of a CBDC in Australia and consists of 14 use cases selected from 142 submissions.
Monoova’s use case explores cross border settlement and custody. The trial has been established with an existing FX client, NexPay, a specialist provider of inbound remittance services in the $30 billion education market.
In the live demonstration, the CBDC Pilot conference witnessed the settlement of the domestic leg of an inbound FX remittance payment.
The AUD payment to NexPay, from a client in Japan, was settled by Monoova to NexPay’s Pilot CBDC wallet providing irrefutable proof of balance of the $25,000 payment backed by the RBA. This step, which represented the domestic leg of the transaction, was the first use of the Pilot CBDC to settle a real-world, cross border payment.
“We have been running our use case on a pilot ecosystem blockchain to demonstrate the value we can deliver to our clients,” explained Tim Stanley (pictured), Head of Product at Monoova. “We’re incredibly proud to have been part of the project and pioneering the use of CBDC in Australia.”
“The trial enables us to identify potential opportunities to improve the transparency and speed, and minimise the counterparty risks, of FX transactions into Australia,” Stanley said. “We see enormous value in increasing our exposure to blockchain technologies, in contributing to the research process and in demonstrating our commitment to innovation and thought leadership across the payments industry worldwide.
“For example, a Monoova FX client may need to disburse U.S. dollars into Australia. Normally, to complete this process, a client would exchange U.S. dollars for fiat Australian dollars, with Monoova working with a banking partner to complete the payout or holding the funds on account until the client issues disbursement instructions.”
Under the CBDC pilot, instead of providing fiat Australian dollars in a balance in its platform, Monoova provides clients with Australian dollars in Pilot CBDC on its platform.
“This enables us to settle instantly for any funds that come to Australia, clients can independently verify account balances on the blockchain rather than rely on reporting from intermediaries, and if clients need to hold money for a period of time before making disbursements, they can do so without counterparty risk,” Stanley said.
Piew Yap, CEO at NexPay, commented, “Our collaboration with Monoova in this pioneering CBDC trial has allowed us to delve into the immense potential of blockchain technology for international education remittance payments. The ability to transfer and track CBDC balances via the Monoova platform enhances security and transparency, which is vital for the high-volume settlements that NexPay manages into Australia. This innovative use of the eAUD signals a transformative shift in cross border transactions.”
While the RBA has not made a decision on whether to issue a CBDC, Stanley is excited about the opportunities the initiative presents to Monoova.
Stanley concluded, “If the RBA proceeds with issuing a CBDC, it potentially opens up new horizons for us. We can minimise counterparty risk at scale in trust-based use cases in regulated industries and undertake FX more efficiently and transparently than we can using international SWIFT payment rails in which money goes through a number of intermediary banks. More broadly, we can stay ahead of the curve on payment innovation.”