cross-border payments

Aussie ‘Big 4’ bank mints stablecoin for carbon trading and remittances

This marks the second “Big Four” bank in Australia to launch an Australian-dollar pegged stablecoin in a bid to boost the digital economy.

National Australia Bank (NAB) is set to become the second “Big 4” Australian bank to launch an Australian dollar-pegged stablecoin on the Ethereum network.

Set to launch sometime in mid-2023, the AUDN stablecoin is aimed at streamlining cross-border remittances and carbon credit trading, according to a Jan. 18 report from the Australian Financial Review (AFR).

NAB chief innovation officer Howard Silby said the decision to mint the AUDN stablecoin — which is backed 1:1 by the Australian dollar (AUD) — was based on the bank’s belief that blockchain infrastructure will play a key role in the next evolution of finance:

“We certainly believe there are elements of blockchain technology that will form part of the future of finance […] From our point of view, we see [blockchain] has the potential to deliver instantaneous, transparent, inclusive, financial outcomes.”

The implementation of AUDN for real-time, cross-border remittances could become a way for customers to sidestep the slower and more costly SWIFT payment network.

Carbon credit trading and other forms of tokenzied real-world assets will also be a major use case for the AUDN, Silby said. He also added that they’re planning to offer stablecoins in “multiple currencies” where the bank has licenses.

NAB’s announcement of the AUDN comes nine months after rival Australia and New Zealand Banking Group (ANZ) launched 30 million tokens of its own stablecoin tickered A$DC in March, which is also used for international remittances and carbon trading.

Prior to ANZ and NAB’s stablecoin projects, the two banks planned on teaming up with the other two “Big Four” Australian banks — Commonwealth Bank of Australia and Westpac — to co-launch a nationwide stablecoin backed by the AUD.

However, it failed due to competition concerns and the banks being at different stages in their adoption and strategy, the AFR explained.

*NAB, one of the “Big Four” banks in Australia, is set to roll out its own stablecoin in mid-2023. Source:* *PYMNTS*

Jonathon Miller, managing director of crypto exchange Kraken Australia, told Cointelegraph that banks are beginning to acknowledge the technical advantages that blockchain infrastructure offers over traditional legacy systems:

“The persistent adoption of crypto technology by financial institutions like ANZ and now NAB for its potential to create significant efficiencies in the financial system […] is an explicit recognition of the competitive advantage over traditional payment systems.”

“We expect this trend to continue, inevitably evolving to include the adoption of various other cryptocurrencies and tokens for increasing use cases in the Australian economy,” he added.

It also remains to be seen how these private bank-issued stablecoins would work in tandem with the Reserve Bank of Australia’s eAUD — a central bank digital currency (CBDC) that is currently in its pilot phase.

However, NAB is confident the two will be able to operate simultaneously and have their own set of unique use cases.

SWIFT action: JPMorgan and Visa team up on cross-border blockchain payments

Visa is set to integrate its B2B Connect network with JPMorgan’s suit of blockchain-based cross-border payment products.

Traditional finance and payment giants JPMorgan and Visa are teaming up to streamline the use of their private blockchain solutions Liink and B2B Connect to facilitate cross-border payments.

According to an Oct. 11 report from Forbes, JPMorgan’s Liink is a network specifically designed for cross-border transfers and is offered under the bank’s blockchain and payments initiative, Onyx. Onyx provides a platform for institutions to share financial information and validate transactions.

Visa’s B2B Connect is a similar network to Liink that was built for institutional grade use and has now been integrated with Onyx’s Confirm.

Confirm is an account-information validation product, and ensures that transacting parties provide genuine identities and correct information. Onyx touts that Confirm is capable of verifying more than 2 billion bank accounts from 3,500 financial institutions.

Finextra reported on Oct. 11 that JPMorgan is looking to rope in a host of founding member banks across the globe as it works to launch Confirm in 10 countries by the end of this year. Moving forward, the bank is said to be eying a rollout in 30 countries next year.

German financial behemoth Deutsche Bank has also signed on to become a founding member of Confirm.

Confirm’s global head, Alex Littleton, explained in a public statement that “Confirm’s growth is heavily influenced by network effects,” adding that, “Naming Deutsche Bank as a founding member, while also establishing interconnectivity to Visa B2B’s blockchain, will accelerate our adoption on a global scale.”

With Visa teaming with JPMorgan and its suite of blockchain products, it seems that the duo has an eye on providing an alternative to the commonly used Society for Worldwide Interbank Financial Telecommunications (SWIFT) messaging system to manage and facilitate cross-border payments.

The notion of cross-border payments has been in the spotlight this week, with the Monetary Authority of Singapore revealing on Oct. 10 that it could look to utilize blockchain tech to provide solutions to current issues with such, including speed and costs.

Ravi Menon, managing director of the Monetary Authority of Singapore, noted in a keynote speech that the current state of cross-border payments is “not fit for the 21st century,” adding that:

“It is slow, costly, opaque, and inefficient, relying on an archaic network of correspondent banks.”

He outlined that the expansion of “private sector blockchain-based payment networks” could be one of the possible ways to solve this.

Ripple Labs has also made moves with its cross-border payments On-Demand Liquidity (ODL) product this week. On Oct. 11, it announced partnerships with payments firm Lemonway and money transfer provider Xbaht that will see the duo leverage the ODL network to provide crypto payments for customers in France, Thailand and Sweden.