One of Australia’s largest banks, National Australia Bank (NAB), have developed a stablecoin, AUDN, that they will introduce by mid-2023. The aim of AUDN is to enable its users to settle transactions in real-time, utilizing Australian dollars via blockchain technology. The stablecoin launches on the Ethereum and Algorand blockchain, a smart contract platform similar to Ethereum.
Stablecoins, are viewed as more effective and less expensive than the interbank cross-border payments system SWIFT, are a sort of cryptocurrency whose value is tethered to another asset class. In this scenario, the NAB will hold the currency and the AUDN will be completely guaranteed by the Australian Dollar.
NAB is the second major Australian bank that has embarked on the creation of a stablecoin. The Australia and New Zealand Banking Group (ANZ) collaborated with cryptocurrency custodian Fireblocks to create a stablecoin tied to AUD.
Through connecting value to a real currency, Stablecoins lessen the volatility seen in many cryptocurrencies. They are a necessary component to achieving the efficiency promised by blockchain technology. Particularly in settlement procedures since they enable simultaneous payment and transfer of digital assets, as opposed to the one- to two-day wait now in place.
Stablecoin adoption is crucial for carbon trading because it enables payment to happen “on chain,” without connecting to conventional payment networks. This produces trading efficiencies, and reduces settlement risk.
Banks are likewise eager to provide stablecoins to investors in the newly-emerging financial sector of “tokenized” (digitized) real-world assets. The sale of digital assets would result in quick settlement, minimizing the counterparty risk. Stablecoins also capacitate the creation of Web3 apps.
Despite a terrible year for cryptocurrency markets in 2022, which culminated in the collapse of the FTX crypto exchange and the arrest of its founder Sam Bankman-Fried, (who will go on trial in October), banks have continued to show interest in blockchain technology to advance the infrastructure of financial markets.