The National Australia Bank (NAB) is creating a stablecoin dubbed “AUDN” that will allow business customers to settle transactions on blockchain technology using Australian dollars, according to a report by the Australian Financial Review (AFR) on January 19.
Per the report, AUDN could also be used in “repurchase agreements,” a form of short-term finance in bond markets, and for “green deposits,” which link customer savings to green loans.
The bank is planning to launch AUDN for transactions in mid-2023, according to the report. The stablecoin will be backed by the Australian dollar one-for-one and held in trust by the NAB.
AUDN to Launch on Ethereum and Algorand
The report stated that the stablecoin would run on the Ethereum network and Algorand blockchain, a smart contract similar to Ethereum. The bank first minted AUDN on Ethereum in December and burned the coin to remove it from circulation.
Commenting on the development, the Chief Innovation Officer at NAB, Howard Silby, said the bank sees blockchain technology forming “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,” he added.
Silby also revealed that NAB plans to offer several other stablecoins backed by other fiat currencies in other jurisdictions where the bank is licensed.
According to the report, the stablecoin will not be available to customers for at least three months as the bank carries out internal testing, including moving money between subsidiaries and branches.
Not the First
Meanwhile, NAB is not the first bank in Australia planning to launch its stablecoin. Australia and New Zealand Banking Group (ANZ) became the first banks to be involved in the creation of a stablecoin early last year.
Australia’s big four banks attempted to create an industry-wide Australian dollar stablecoin early last year, but failed due to “competition concerns” and the banks being at different stages in their crypto strategy, AFR said.
