National Australia Bank (NAB) minted a bank-backed stablecoin AUDN on the Ethereum blockchain in December, The Australian Financial Review (AFR) reported. NAB plans to roll out its solution in mid-2023, targeting business customers using blockchain for trading carbon credits and overseas payments. It’s the second big four Australian bank to unveil a stablecoin after ANZ in March 2022.
The stablecoin would be backed by Australian dollars held in a NAB trust account.
“We certainly believe there are elements of blockchain technology that will form part of the future of finance,” said NAB chief innovation officer Howard Silby.
“That continues to be the source of some debate. But certainly, from our point of view, we see [blockchain] has the potential to deliver instantaneous, transparent, inclusive, financial outcomes.”
Apart from carbon credit trading, the bank also envisages using it to settle repurchase agreements (repos).
NAB is one of three founders of Carbonplace, a blockchain infrastructure that aims to be a settlement network for carbon credits and plans to integrate with multiple marketplaces. Other banks behind the initiative include CIBC, Itaú Unibanco, Natwest, UBS, BNP Paribas, SMBC and BBVA. The launch is expected soon.
Meanwhile, Philip Lowe, Governor of the Reserve Bank of Australia, said it was exploring the pros and cons of stablecoins, which require a ‘strong regulatory regime’. The central bank is also conducting a digital currency industry pilot program for a CBDC in conjunction with the Digital Finance Cooperative Research Centre (DFCRC).
The AFR also reported that the banks had been exploring a possible joint stablecoin initiative, but it didn’t take off because of competition concerns and the banks are at different crypto adoption stages. There was much excitement in early 2021 when Australian Payments company EFTPOS joined the Governing Council of the Hedera Hashgraph DLT network. EFTPOS is jointly owned by 19 firms, including Australia’s biggest banks.