Summary
- First cross-border transaction with eAUD and USD achieved.
- RBA works with Australian blockchain firms and major banks.
- Privacy issue remains key point and major obstacle to adoption
David Lavecky, head of blockchain firm Canvas, recently spoke in an interview about the firm’s involvement in the Australian Reserve Bank’s (RBA) pilot to a central bank digital currency (CBDC). While many countries are working on CBDCs, they are all in different stages of development. Lavecky co-founded Canvas, which was a finalist in the Australian Fintech Awards in 2023 for Excellence in Blockchain/Distributed Ledger.
Testing eAUD in Cross-Border Use
Lavecky explained that Canvas was part of a pilot on CBDC usage in Australia. By using Canvas Connect, a layer-2 running on Ethereum (ETH) the test accomplished the first foreign transaction involving a CBDC to date.
Lavecky stated, “The solution has the potential to dramatically increase speed and reduce the risks and costs compared to traditional foreign exchange (FX) trading and remittance networks.”
Reserve Bank Explores CBDC Use Cases
The RBA commenced a pilot project in March of 2023 to see what potential use cases and economic benefits CBDCs could potentially bring to the domestic economy.
Dilip Rao, Program Director for CBDCs at the Digital Finance Cooperative Research Centre (DFCRC) said,
The variety of use cases proposed covers a range of problems that could potentially be addressed by CBDC, including some that involve the use of CBDC for atomic settlement of transactions in tokenised assets.
Dilip RaoApart from Canvas, other partners include ANZ, Commonwealth Bank, the Australian Bond Exchange, Mastercard/ Cuscal, Monoova, and others.
Privacy Remains Crucial and Major Stumbling Block
Many involved with crypto believe CBDCs will have a detrimental effect, running counter to the ideals of Bitcoin. This is why Lavecky emphasised the importance of balancing privacy with interoperability and efficiency. He called this the concept of “regulated privacy.”
In an interview with CoinDesk in May 2023, Lavecky discussed this concept in more detail, revealing how exactly this could be achieved.
He stated,
When transactions are performed on Canvas Connect and you go and look on Etherscan, you can’t see individual transactions that are taking place in the layer-2. By default, transactions which are completed on our layer-2 are only visible to the counterparties that were involved in the transaction.
David LaveckyHe claimed that this approach allows Canvas to preserve the necessary data while satisfying KYC and AML requirements to remain compliant with global financial regulations.
Some argue that CDBCs will most likely exist in some shape or form, making it crucial to guarantee privacy. It will also be essential to ensure that CBDCs are not becoming a Chinese-style tool of oppression and that people have options as they do now.
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