One of the four biggest banks Australia, National Australia Bank (NAB), is getting ready to introduce a stablecoin on the Ethereum (ETH) network, according to the Australian Financial Review (AFR).
The Australian Dollars (AUD) held in trust at NAB will serve as the stablecoins 1:1 backer.
In order to eliminate it from circulation, the NAB initially created AUDN in December 2022 on the ETH blockchain, then immediately burned it from circulation. The AFR story claims that AUDN has been developed for certain use cases as opposed to floating on cryptocurrency exchanges.
According to the AFR story, the NAB plans to provide AUDN for institutional clients by the middle of the year following internal testing. Banking authorities are monitoring the process as NAB tests AUDN by moving money between subsidiaries and branches.
According to Howard Silby, chief innovation officer at NAB, the bank's main focus will be using AUDN as a settlement token. With AUDN, NAB hopes to transition from the current two days to "atomic" or immediate settlements.
“We certainly believe there are elements of blockchain technology that will form part of the future of finance.”
Additionally, according to Silby, AUDN may be used for "green deposits" that connect client savings to green loans as well as repurchase agreements, which are brief-term loans on the bond market.