The revelation this week that NAB has joined ANZ to create an Australian dollar stablecoin shows banks will not be passengers as the web3 economy develops.
Technology companies are muscling in on banks’ turf. Distributed ledgers, like the one that underpins bitcoin, allow digital “tokens” – which can operate as a form of money – to be created and distributed by anyone through the internet.
Digital money can also be programmed through a related technology known as “smart contracts”, which could create a new world of automated micropayments. It could underpin new markets, from trading carbon credits to sending money around the world.– essentially a digital representation of a bank deposit to allow Australian dollars to be used for blockchain-based transactions by corporate customers – was a significant milestone.
“If stablecoins will be widely used as a form of money in the future, there is every reason to think that commercial banks could be significant issuers of those claims.”Central banks are also working to create digital versions of cash, known as central bank digital currencies , which could also enable cheaper and faster commerce over blockchain systems, while allowing governments to keep control of money.
Lessons from the rout are emerging. One is it may be better for the financial system if stablecoins are offered by regulated and trusted banks, so users can be confident they are backed one-to-one by money in a bank account, guaranteed by the government.Financial services is not the only industry slow to respond to technological tsunamis. In the music world, record companies watched as computers allowed CDs to be burnt and shared on internet networks.
“Then there are the large technology companies which are household names – say Facebook or Google – which have large user bases, and could potentially launch retail stablecoins that might scale up very quickly.”Part of the driver of the banks’ response is a desire to participate in emerging markets for “tokenised” assets, extending beyond stablecoins and speculative crypto coins.
The move by NAB and ANZ to mint stablecoins raises strategic questions for the other two big banks. Commonwealth Bank’s crypto strategy is uncertain after a rare strategic error last year under chief executive Matt Comyn. The bank then tried to facilitatea move that ASIC now prevents given the volatility and potential to expose customers to big losses. It remains to be seen whether CBA will go down the stablecoin route.
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