National Australia Bank (NAB) has created its own stablecoin, AUDN, according to a report in Australian Financial Review. People in the crypto community are skeptical about stablecoin after the collapse of Terra’s stablecoin UST. Nevertheless, NAB decided to utilize AUDN to enable its customers to make transactions using Australian dollars with blockchain technology.
It is worth mentioning that the bank plans to introduce the stablecoin for transactions in the middle of the year. It will be operating on the Algorand blockchain and the Ethereum network. The stablecoin issued by NAB is fully backed 1:1 by Australian dollars.
Howard Silby, the Chief Innovation Officer commented:
“We certainly believe there are elements of blockchain technology that will form part of the future of finance. 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.”
The stablecoin may be used for “green deposits,” in addition to regular transactions and international transfers, and for bond market buyback agreements. The use of the AUDN as a settlement token will continue to be the major focus. The NAB will internally test the stablecoin during the following quarter by transferring funds among its branches and subsidiaries.
What are stablecoins?
A stablecoin is a form of cryptocurrency that is linked to another asset class, such as gold or a fiat currency in order to stabilize its value. Compared to the interbank SWIFT cross-border payments solution, it is more effective and less expensive. In this scenario, the NAB will hold the currency and the AUDN will be fully backed by the Australian dollar.
Australia’s central bank has begun a pilot test to examine possible use cases for Australia’s own Central Bank Digital Currency, looking to finish by mid-2023. Australia has adopted token mapping to identify characteristics of all crypto tokens and how they operate.
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