National Australia Bank eyeing ‘green’ stablecoin – Ledger Insights

Last week it was reported that the National Australia Bank (NAB), one of the country’s big four banks, has issued a stablecoin AUDN, which is not yet widely available. A few days later, NAB confirmed a partnership with agritech startup Geora to use blockchain to record sustainable agricultural practices. The two initiatives are likely to overlap.

As a background to the agricultural partnership, NAB has an ‘Agri Green Loan’ ledger, and the blockchain solution is used to track borrowers’ compliance with the green agreements for the loan.

“With our stablecoin functionality, which can be characterized as a tokenized deposit, plus our use of blockchain to verify our green assets, a tokenized green deposit offering is certainly in NAB’s Digital Assets product development pipeline,” said NAB’s Chief Innovation Officer Howard Silby.

NAB sees a role for itself as an intermediary between investors who want to use their money for sustainable solutions, whether that is parking their money in term deposits or bonds. On the other hand, borrowers are adopting greener business models, such as the Leather Cattle Company, which is a NAB customer.

Geora’s private Ethereum blockchain is used to track the green credentials. Apart from using distributed ledger for food traceability, the blockchain startup envisions a future where tokenized agricultural products, agri-assets, are used as collateral for loans.

Use of blockchain helps to standardize reporting across different loans, with the potential to create a green bond portfolio.

Rounding back to NAB stablecoin’s original purpose, the use cases are for cross-border transfers, carbon credit trading and a form of short-term financing in bond markets, which we assume is the reference to “repo”.

The Stablecoin Plan

We were curious about the green aspect of stablecoin and received the following response via email.

“We believe that parts of the future of finance will be blockchain-enabled because it has the potential to help deliver instant, transparent and inclusive financial outcomes for customers as our economy becomes increasingly digitized,” Silby wrote.

“As a trusted financial institution, we have an important role to play in advancing the maturity of the blockchain-enabled sector. Our focus is very much on looking at use cases where there is high friction and clear customer benefit, particularly for larger businesses in our corporate and institutional bank customer base.”

“This could be helping to deliver instant settlement for business customers doing cross-border money transfers, or it could be helping with things like carbon credit trading which we know many of our customers are increasingly interested in pursuing.”

“We created our stablecoin on the Ethereum blockchain in December. It is not yet available for more widespread use. We will soon begin testing our stablecoin with internal transactions before looking to expand the use cases in close collaboration with the needs of our enterprise customers.”