This is the second of Australia’s “Big 4” banks to create an Australian-dollar pegged stablecoin in an effort to stimulate the digital economy.
National Australia Bank (NAB) will become the second of Australia’s “Big 4” banks to issue an Australian dollar-pegged stablecoin on the Ethereum network.
According to a Jan. 18 report in the Australian Financial Review, the AUDN stablecoin is set to emerge in mid-2023 with the goal of facilitating cross-border transfers and carbon credit trading (AFR).
The decision to mint the AUDN stablecoin on Ethereum — which is backed 1:1 by the Australian dollar (AUD) — was based on NAB’s chief innovation officer Howard Silby’s confidence that blockchain infrastructure will play a significant part in the next evolution of finance:
We certainly believe there are elements of blockchain technology that will form part of the future of finance […] From our point of view, we see [blockchain] has the potential to deliver instantaneous, transparent, inclusive, financial outcomes.”
The use of AUDN for real-time, cross-border remittances could allow clients to avoid the slower and more expensive SWIFT payment network.
Carbon credit trading and other forms of tokenized real-world assets will also be significant use cases for the AUDN, according to Silby. He also stated that stablecoins will be available in “many currencies” where the bank has licences.
The AUDN announcement comes nine months after rival bank Australia and New Zealand Banking Group (ANZ) debuted 30 million tokens of its own stablecoin, A$DC, in March 2022, which is also used for international remittances and carbon trading.
Prior to the launch of ANZ and NAB’s stablecoin projects, the two banks had planned to collaborate with the other two “Big 4” Australian banks — Commonwealth Bank of Australia (CBA) and Westpac — to establish a countrywide stablecoin backed by the AUD.
However, it failed due to competition concerns and the banks’ varying phases of acceptance and strategy, according to the AFR.
According to Jonathon Miller, managing director of crypto exchange Kraken Australia, banks are beginning to recognise the technical advantages that blockchain architecture offers over older legacy systems:
“The persistent adoption of crypto technology by financial institutions like ANZ and now NAB for its potential to create significant efficiencies in the financial system […] is an explicit recognition of [blockchain’s] competitive advantage over traditional payment systems.”
“We expect this trend to continue, with the adoption of numerous additional cryptocurrencies and tokens for increasing use cases in the Australian economy,” he added.
It is also unclear how these private bank-issued stablecoins will interact with the Reserve Bank of Australia’s eAUD — a central bank digital currency (CBDC) that is now in pilot mode.
However, NAB is optimistic that the two will be able to coexist and each have their own set of unique use cases.
