AUDN is fully backed, one-for-one with Australian fiat money held on trust in the bank.

The National Australia Bank (NAB) (ASX: NAB) plans to launch a stablecoin, called AUDN, that will be pegged to the Australian dollar and will be on the Ethereum network.

The stablecoin, expected to launch in mid-2023, aims to streamline cross-border transactions and carbon credit trading.

“We certainly believe there are elements of blockchain technology that will form part of the future of finance,” said NAB chief innovation officer, Howard Silby, to the AFR. “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.”

NAB stablecoins 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, according to Mr Silby.

DigitalX, an ASX-listed digital asset specialist, has pledged to use the AUDN once it is launched to NAB customers.

DigitalX CEO Lisa Wade, a former NAB executive said: “Stablecoins are the link in the chain for essential financial market infrastructure and, absolutely, banks have the regulatory advantage – I can trust my deposit.”

NAB’s announcement comes nine months after rival bank, Australia and New Zealand Banking Group (ANZ) (ASX: ANZ), launched A$DC, its own stablecoin for international trading and settlements.

In June 2022, ANZ’s institutional partner Victor Smorgon used A$DC to purchase Australian Carbon Credit Units from blockchain-based carbon trading platform BetaCarbon.

It will be interesting to see how other financial institutions adopt blockchain technology and stablecoins in the future.

A previous collaboration between NAB, ANZ, and the two other banks in Australia’s Big 4 aimed to launch a nationwide stablecoin backed by the Australian dollar. The project failed because some of the banks were at a different stage in their adoption strategy and didn’t see the adoption of stablecoins this soon on their roadmaps.

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