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Imperium Market’s eAUD pilot achieves atomic settlement for securities transactions

eAUD cbdc digital currency

On Monday, Australian company Imperium Markets announced the successful execution of its central bank digital currency (CBDC) trial, using the country’s eAUD to achieve atomic settlement of securities transactions. 

The test demonstrated the potential of CBDCs to create efficiencies and remove risks from wholesale money markets and debt capital markets, which play a vital role in the Australian economy. It was part of the Reserve Bank of Australia’s (RBA) CBDC pilot program, which has been publishing the results of its various use cases since May. 

Imperium’s CBDC trial

The pilot saw Westpac and the Commonwealth Bank, two of Australia’s largest financial institutions, issue certificates of deposit on a blockchain using CBDC for settlement. The successful use case confirmed the benefits of distributed ledger technology (DLT) for streamlining trading, settlements and securities custody through atomic settlement. 

Not only does this mean that the asset and payment swap instantly, but also that if one side of the leg fails, so does the other. This eliminates potential settlement, counterparty, and operating risks from the term deposit markets and can create huge efficiencies for Australian banks, which depend on them for funding needs. 

The news represents a major shift for a sector that had traditionally lacked transparency and technological advancement. “This is a key source of funding for the banks but a market that has been stuck in 1995 from a technology perspective,” Stu Burns, Imperium Markets CEO told the Australia Financial Review, referring to the over-reliance on phone calls, emails, and spreadsheets. Meanwhile, last year the ASX abandoned its blockchain post trade solution for the equity market.

Looking forward, the company will continue testing its technology infrastructure across various applications with its partner R3, the developer of the Corda DLT. “Now we have completed the RBA Pilot, we are looking to collaborate with the market and regulators to test all the benefits of DLT, not just for settlements and payments,” said Rod Lewis, Chairman of Imperium Markets.

Australia’s CBDC pilot program

Imperium’s test was one of 14 use cases in the eAUD pilot series. Last month, we reported Novatti’s trial, which demonstrated the potential of CBDCs to provide a credible and risk-free asset for backing privately-issued stablecoins. And in May, we also wrote about CANVAS’ pilot, which used the eAUD to test foreign exchange transactions. 

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