After the collapse of Terra’s UST, people from the space have become skeptical about stablecoins. Nevertheless, the space has seen major developments on this front lately. Market participants, for instance, have been accumulating it as dry powder in anticipation of a bull run. Entities, on the other hand, have been launching their own variants.
The Australian Financial Review reported on Thursday that the National Australia Bank has created its own stablecoin, the AUDN. The same will allow its customers to settle transactions using blockchain technology in real-time using Australian dollars.
Notably, the bank intends to launch the stablecoin mid-year for transactions. It will be set up on the Ethereum network and Algorand blockchain. NAB’s stablecoin is fully backed, one-for-one by Australian dollars.
NAB plans to launch stablecoins in “multiple currencies.”
Commenting on the latest development, NAB’s Chief Innovation Officer, Howard Silby said,
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.
Apart from using the stablecoin for daily transactions and cross border remittances, the executive revealed that it could also be used in bond market repurchase agreements and for “green deposits.” The main focus will, however, remain on using the AUDN as a settlement token.
Commenting on the lessons learnt from the UST saga last year, former NAB executive and current CEO of DigitalX Lisa Wade said,
What we learnt from Luna last year is the look through of the back book of the stablecoin is the most important thing: if it is not constructed properly, there is counterparty risk.
Over the next quarter, the NAB will be internally testing the stablecoin by moving money between subsidiaries and branches. Only once that is all done and dusted the AUDN will be launched.
Revealing NAB’s future plans, Silby said,
We are planning to offer stablecoins in multiple currencies in jurisdictions where NAB has licenses.
Other prominent Australian players have also dipped their toes into the space. Towards the end of Q2 last year, Novatti Group quite confirmed that its deal with Ripple and Stellar to build its AUDC stablecoin was on. Eventually, the stablecoin was launched in November last year on the Stellar blockchain.