National Australia Bank (NAB) minted a bank-backed AUDN stablecoin on the Ethereum blockchain in December, The Australian Financial Review (AFR) reported. NAB plans to roll out its solution in mid-2023, targeting business customers who use blockchain to exchange carbon credits and offshore payments. It is the second major Australian bank to introduce a stablecoin after ANZ in March 2022.

The stablecoin would be backed by Australian dollars held in a NAB trust account.

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

“That remains the source of some debate. But certainly, from our point of view, we see [blockchain] it has the potential to deliver instant, transparent and inclusive financial results.”

In addition to trading carbon credits, the bank also plans to use them to settle repurchase agreements (repos).

NAB is one of the three founders of Carbonplace, a blockchain infrastructure that purports to be a carbon credit settlement network and plans to integrate with multiple marketplaces. Other banks behind the initiative include CIBC, Itaú Unibanco, Natwest, UBS, BNP Paribas, SMBC and BBVA. The release is expected soon.

Meanwhile, Philip Lowe, Governor of the Reserve Bank of Australia, said he was exploring the pros and cons of stablecoins, which require a “strong regulatory regime.” The central bank is also running a digital currency industry pilot program for a CBDC together with the Digital Finance Cooperative Research Center (DFCRC).

The AFR also reported that the banks had been exploring a possible joint stablecoin initiative, but it did not get off the ground due to competition concerns and the banks are at different stages of cryptocurrency adoption. There was a lot of excitement in early 2021 when Australian payment company EFTPOS joined the Governing Council of the Hedera Hashgraph DLT network. EFTPOS is jointly owned by 19 companies, including Australia’s largest banks.