The benefits to customers of Australia-dollar based stablecoins like A$DC are manyfold.
The simplicity of the A$DC process when compared with other digital currencies is key. The local nature of each of the parties - the customer, investor, and exchange - takes one or two steps out of the process compared with similar offshore-based systems, simply because it is a domestic coin. Before A$DC, businesses had to flip in and out of mostly US-dollar denominated coins, taking on costs and exchange-rate risk.
Another factor is trust. A$DC is from a regulated ADI (authorised deposit-taking institution) in Australia so customers can be certain of its security and legitimacy.
The smart contract associated with A$DC speaks to this. OpenZeppelin handled smart contract auditing on the Victor Smorgon Group transaction. As the coin is minted, a smart contract is then sent to OpenZeppelin for qualitative review, and the findings are published publicly. This adds a critical layer of transparency to the process.
From an ANZ perspective, this was a critical hygiene element of the transaction and an important part of ensuring our regulatory obligations are met, demonstrating we're dealing with the right kind of partners.
So, what does the A$DC mean for the future of finance in Australia? Will we see other banks enter the space or will the Reserve Bank of Australia even step into the space? Much of this will depend on ongoing customer demand.
At ANZ, we’ve noted growing interest in central-bank digital currencies, including from customers. Ultimately, it’s up to the RBA to determine, alongside the industry, what the use cases are that would be uniquely served by a CBDC, be that at a wholesale or retail level.
Much of the focus of CBDCs currently surrounds their application in the payments space, particularly at a retail level. At ANZ, with think A$DC will be programmable for our institutional customer needs. Therein lies the key difference.
At ANZ, we expect the digital-asset economy to accelerate. One of the foundational elements of that is a digital $A. But that doesn't mean an Australian bank-issued coin can't exist side by side with a CBDC. It’s clear they will have different purposes and fulfil different needs.
What’s also clear is ANZ’s customers – and all bank customers - want to be able to transact in digital assets. They want to be able to have confidence they can transact securely and be able to use those coins domestically.
At ANZ, we strongly believe A$DC is only the first digital asset we'll deal with. From this, we hope to see our services develop to enable transactions across a whole range of other digital assets.
A$DC is just the beginning.
Nigel Dobson is Banking Services Lead at ANZ Institutional
This article was originally published on ANZ’s Institutional Insights website