‘Critical development for digital finance in Australia’: RBA moves ahead with CBDC pilot as fintech Canvas takes centre stage

The Reserve Bank of Australia (RBA), in collaboration with the Digital Finance Cooperative Research Centre (DFRC), is holding a CBDC pilot demo day today in Sydney.

The plan is to showcase, through a series of demonstrations, the potential use cases and the economic benefits of a central bank digital currency (CBDC) in Australia.

Before we dig further into that, we feel it necessary to note that CBDCs aren’t among the most popular developments among the wider, decentralised-loving cryptoverse.

In fact, many builders in the crypto space are downright hostile to the concept, sometimes citing Orwellian control and privacy invasion as primary reasons for the disdain. (We know, because we’ve chatted with several of them over the past couple of years.)

It’s an area, however, that we will endeavour to explore further with a view to finding balanced insights. If crypto adoption is to advance both here in Australia and globally, the importance of collaborative efforts with governments and regulated industry, and the implications from that across the cryptoverse, shouldn’t be dismissed.

In the meantime, let’s briefly touch on what’s happening today over at the Australian CBDC Pilot 2023…

What’s happening at RBA CBDC demo day?

The event is an all-day, invite-only conference in Sydney billed as a “collaboration between industry and pilot participants”.

Those participants, by the way, include representatives from big banks ANZ, NAB and CBA, as well as the ASX, Mastercard, Novatti, Unizon/Zerocap, Auspay Net, Google Cloud, Canvas and more.

Kind of a big deal, then, that, as we type, is showcasing various demonstrations of how an RBA-backed CBDC could be utilised in: bond sales and settlements, cross-border settlements and custody, bioversity and nature-based asset trading, livestock auctions, tokenised bill payments, offline payments, web3 commerce broadly and more.

You can get a sense of the scale of what they’re covering from the event’s full agenda, here.

Canvas facilitates forex transaction demos with Aussie CBDC

As mentioned, also there today, conducting one of the most prominent demonstrations, is the fintech Canvas. It’s a Sydney-based, global blockchain company on a mission to digitise finance using layer 2 ZK (zero-knowledge) tech, which is regarded by some/many as the smartest Ethereum-blockchain-scaling technology in the business.

The Canvas demo focused on how foreign exchange (forex) trading of an AUD CBDC for USDC (one of the crypto industry’s leading US-dollar stablecoins) can work on Canvas’ Financial Market Applications and on its ZK Layer 2 privacy network – Canvas Connect.

(Note the word privacy there, which is encouraging. More on that in a sec.)

Last week, by the way, Canvas facilitated the very first forex transaction using an Aussie CBDC, which was successfully completed between the ASX listed DigitalX (DigitalX (ASX:DCC) ), and Fund Manager TAF Capital, to trade eAUD to USDC on Wednesday May 17.

Blockchain start-up #Canvas announced the successful implementation of its #CBDC trial in Australia, using eAUD to test FX transactions. During the trial period, DigitalIX and TAF Capital converted eAUD to USDC on the Ethereum Layer 2 solution. pic.twitter.com/0yuNruY4L4

— MetaEra (@MetaEraHK) May 18, 2023

Today’s demo continued in the same vein.

“We believe our solution has the potential to dramatically increase speed and reduce the risks and costs compared to traditional Foreign Exchange Trading & Remittance networks, and will radically transform finance and markets over the next decade,” said David Lavecky, Canvas Co-Founder and CEO at the event, adding:

“The opportunity for CBDCs and Bank Deposit tokens in Foreign exchange trading and international remittances is significant and we’ve successfully shown through real transactions the possibilities and efficiencies of the Canvas Connect network,” he said.

Regarding the privacy aspect of its trading-facilitation capabilities, Lavecky also noted:

“Our Layer 2 ZK network, along with a suite of critical Financial Markets Applications enables the Transfer, Trade & Investment of digital assets, which assures privacy, confidentiality, low cost and high speed.

“Our solution utilizes privacy-focused ZK Layer 2 technology to demonstrate that the use of CBDC and Digital currencies like USDC in FX trading and Remittances can potentially enable frictionless, 24x7x365 trading and global movement of foreign currencies.”

“Today’s CBDC pilot live demonstration is a critical development for digital finance in Australia,” concluded the Canvas CEO.