National Australia Bank builds new stablecoin
Coindesk • January 29, 2023
NAB, one of the largest banks in Australia, is developing a stablecoin called AUDN, set to launch in mid-2023. This stablecoin will allow NAB customers to settle transactions using Australian dollars in real time on blockchain technology. In addition, AUDN can be used for various purposes like carbon credit trading, overseas transfers, and repurchase agreements. The stablecoin will be launched on both Ethereum and Algorand blockchains.
A stablecoin is a type of cryptocurrency that has its value linked to another asset, like a fiat currency or gold, to maintain price stability. In this case, AUDN will be fully backed by the Australian dollar and held by NAB. NAB is the second major Australian bank to create a stablecoin, following the collaboration of Australia and New Zealand Banking Group with crypto custodian Fireblocks to launch a stablecoin pegged to the Australian dollar.
The Australian government recently introduced token mapping and started a pilot program to explore potential use cases for its own Central Bank Digital Currency, expected to be finished by mid-2023. To enhance security in the crypto space, the government also plans to establish a framework for licensing and regulation of crypto service providers in 2023.
While both CBDCs and stable coins are meant to represent a unit of fiat currency, there is a difference. A stablecoin is a type of cryptocurrency whose value is pegged to another asset, such as a fiat currency, commodity, or even a basket of assets, to stabilize its price and avoid the volatility associated with other cryptocurrencies. They can be created by commercial organizations, decentralized autonomous organizations (DAOs) or (online) communities. The main purpose of stablecoins is to provide a more stable form of digital currency that can be used for various transactions and investment purposes.
On the other hand, a Central Bank Digital Currency (CBDC) is a digital version of a country's fiat currency issued by the central bank. It aims to provide an electronic form of the country's legal tender that can be used for various transactions and to enhance the current payment and settlement systems. Unlike stablecoins, CBDCs are issued and backed by a country's central bank, ensuring full legal backing and stability, while also allowing for tighter control over the country's economy.