Monoova makes history with first cross-border Australian CBDC settlement

Monoova has successfully completed the first cross-border settlement using an Australian CBDC dollar. 

The Reserve Bank of Australia (RBA) and the Digital Finance Cooperative Research Centre (DFCRC) hosted the live demonstration at a conference in Sydney that invited all participants in the Australian CBDC pilot project, including Monoova whose CTO Nicholas Tan initiated the launch. 

Having been established last year, the pilot set out to explore potential use cases for a CBDC in Australia, as well as the economic benefits that it would bring with it. A total of 14 use cases were later selected by the RBA among 142 applications from banks, fintechs and payment firms. Monoova’s case focuses on cross-border payments and asset custody.

The process behind it involved an AUD $25,000 payment from Japan being sent to one of Monoova’s existing FX clients, NexPay, with the whole amount being converted to Australian CBDC and successfully landing into NexPay’s CBDC wallet – a process that was overseen by the RBA from start to finish. 

On the pilot, Piew Yap, CEO of 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.”

Further comments were provided by Tim Stanley, Head of Product at Monoova, who said: “We have been running our use case on a pilot ecosystem blockchain to demonstrate the value we can deliver to our clients.

“We’re incredibly proud to have been part of the project 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. 

“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.”

Stanley then went on to give more examples of an Australian CBDC simplifying cross-border payments: “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.”

Being able to provide Australian dollars in the form of CBDC however brings improvement to that.

“This enables us to settle instantly for any funds that come to Australia,” Stanley said. “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.

“A CBDC 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 with international SWIFT payment rails where money goes through a number of intermediary banks. More broadly, we can stay ahead of the curve on payment innovation.”