National Australia Bank plans to launch a stablecoin called AUDN in mid-2023 for real-time transactions using Australian dollars.
The stablecoin will be used for carbon credit trading, overseas money transfers, and repurchase agreements.
This move also aligns with financial institutions’ growing interest in blockchain and stablecoins.
National Australia Bank (NAB), one of the four largest banks in Australia, plans to launch a stablecoin called AUDN in the middle of 2023, according to the Australian Financial Review (AFR). The Australian dollar will fully back the stablecoin, and the NAB will hold the money.
The stablecoin will also aim to allow customers to settle transactions on blockchain technology in real time using Australian dollars. AUDN could also be used for carbon credit trading, overseas money transfers, and repurchase agreements.
AUDN will launch on Ethereum and the Algorand blockchain, a smart contract platform similar to Ethereum. Stablecoins like AUDN are pegged to an asset class to help stabilize their price, potentially making it more efficient and cheaper than interbanking cross-border payment solutions.
Australia’s Stablecoin Amid Crypto Industry Regulation Efforts
This marks the second major Australian bank to become involved in creating a stablecoin. Australia and New Zealand Banking Group (ANZ) teamed up with crypto custodian Fireblocks to mint a stablecoin pegged to the Australian dollar called A$DC.
Australia also has introduced token mapping to identify and manage crypto tokens, while the central bank has started a pilot test of potential use cases for CBDC. This is currently due for completion by mid-2023. The government has also promised to establish a framework for licensing and regulating crypto service providers to help increase safety around crypto.
JUST IN: National Australia Bank launches #stablecoin fully backed by Australian dollars.
— Watcher.Guru (@WatcherGuru) January 19, 2023
The AUDN stablecoin will be backed 1:1 by the Australian dollar. It is aimed at streamlining cross-border remittances as well as carbon credit trading. NAB chief innovation officer Howard Silby said the decision to mint the AUDN stablecoin was based on the bank’s belief that blockchain infrastructure will play a key role 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, blockchain has the potential to deliver instantaneous, transparent, inclusive, financial outcomes.” Silby stated.
Impact of AUDN on Transactions and Digital Economy
The implementation of AUDN for real-time, cross-border remittances could become a way for customers to sidestep the slower and more costly SWIFT payment network. Furthermore, AUDN has potential use cases in carbon credit trading and tokenized transactions.
The launch of AUDN by National Australia Bank aligns with growing interest in blockchain and stablecoins among financial institutions. It is also expected to make transactions more efficient and cost-effective and support digital economy growth. Additionally, the adoption of blockchain by more banks may lead to further innovation in finance.
On the Flipside
AUDN could disrupt traditional financial institutions by providing a more efficient and cost-effective solution for cross-border transactions.
The use of stablecoins is increasingly being seen as a threat to traditional forms of currency. Financial institutions raise concerns about the stability of such an economy.
Financial institutions’ adoption of blockchain technology and stablecoins also risks market manipulation and reduced competition.
Why You Should Care
The launch of AUDN by NAB is a significant development in the financial industry. The efforts further align with the Australian government’s efforts to regulate the crypto industry, making it worth paying attention to, particularly in the region.
More on Stablecoins: Japan to Revoke Ban on Foreign Stablecoins in 2023: Report
More on Australia: Ex-Ripple Executive to Lead Australia’s CBDC Project
