NAB has announced it has completed an intra-bank, cross-border transaction using its own stablecoin, in what has been described as a world-first for a major financial institution.
According to NAB, the pilot transaction on the Ethereum blockchain involved the deployment of stablecoin smart contracts for seven major global currencies.
The bank said that the pilot has demonstrated the potential to cut cross-border transactions “from days to minutes” and provide its clients who operate in multiple jurisdictions and currencies with a simpler and faster experience.
In January, NAB became the second major Australian bank to create a stablecoin linked to the Australian dollar called AUDN, after ANZ created its A$DC in March last year.
NAB executive general manager, markets, Drew Bradford said that the bank was committed to pursuing the right digital asset opportunities with clear customer benefits.
“Bringing multi-currency stablecoins to market demonstrates NAB’s focus on simplifying international banking protocols to increase speed and transparency while lowering costs and reducing complexity for customers,” he said.
“We believe that elements of the future of finance will be blockchain enabled and we’re already witnessing rapid change in the tokenisation market. The stringent governance frameworks we have in place ensures we can support the creation of a safe and reliable digital financial system.”
The move comes as the Reserve Bank (RBA) and the Digital Finance Cooperative Research Centre (DFCRC) undertake their central bank digital currency (CBDC) pilot. Commonwealth Bank and ANZ are among the 14 organisations which have been tasked with exploring the potential use cases of a CBDC in Australia.
NAB indicated that its own AUDN will be the cornerstone for its ambitions in digital assets. The stablecoin will be fully backed one-for-one with the Australian dollar and will be managed as a liability of the bank.
It is aiming to enable transactions across seven of the most utilised global currencies, and currently expects to be supporting select corporate and institutional clients to transact using digital assets by the end of the year.
For the pilot, NAB partnered with technology providers Blockfold and Fireblocks, leveraging their expertise for smart contract creation, securely minting and burning the bank’s stablecoin, and managing the direct custody of the digital assets on the blockchain technology.
“Australia continues to be a global torch bearer for tokenisation in financial services, with NAB leading the charge in the world’s first use case of a large financial institution leveraging a public blockchain for cross-border payment rails,” commented Fireblocks chief executive officer and co-founder Michael Shaulov.
“NAB’s successful trade execution marks the beginning of the evolution of financial services from Web2 to Web3, underpinned by blockchain technology as well as strong governance and risk management.”
Jon Bragg
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.
