Six Global Banks to Issue Stablecoins on IBMs Blockchain Network
Brazil’s Banco Bradesco, South Korea’s Bank Busan, and the Philippines’ Rizal Commercial Banking Corporation are six of the global banks and they are pulling together to create stablecoins which will be backed by each country's fiat. The other banks which have also signed up to join this venture have yet to be disclosed. What we do know is that some of the undisclosed banks will be issuing stablecoin backed by Euros and Indonesian Rupiah.
The new stablecoins have been created to improve the efficiency of financial markets. The banks will also be looking into ways that they can improve privacy and cybersecurity to ensure that everyone's digital currency is kept safe from hackers - which is the reason banks have been hesitant to issue cryptocurrency in the first place. However, the current rise of cryptocurrency is proving that it may be time to start exploiting this new technology.
In September 2018, IBM launched a cross-border payment network called Blockchain World Wire in collaboration with Stellar. There are currently 44 banks on this service which enables real-time transactions. IBM has also partnered with Stronghold to create the Stellar network's first stablecoin, which will be backed by the USD. The stablecoin created by Stronghold is the only stablecoin available on the blockchain at its launch while others are still awaiting approval and will join after they have been received the regulator's go-ahead.
Currently, the only cryptocurrency available on IBM's blockchain network is Stellar Lumens, while other cryptocurrencies are being put off for the time being due to financial institutions remaining wary of the volatility of cryptocurrency.
The Blockchain World Wire has payment locations in over 70 countries with 48 currencies where people can easily send and receive money. IBM's head of blockchain for financial services, Jessie Lund, is very optimistic about the effect this new step will have on the crypto-economy, in a statement she said:
“As more stablecoins come on board, the whole notion of FX changes over time. We are working very hard to expand the ecosystem of stablecoins that will include many more banks and many more fiat currencies – so digital representations of fiat currencies – and even, eventually, the central bank issued digital currencies.”
Stablecoin is far more reliable and stable than cryptocurrencies and could be the first step in transitioning the wider population over to digital currencies. Stablecoins are backed by fiat currency which makes them less volatile and more predictable.