IBM is taking its banking clients a step closer to cryptocurrency with IBM’s Stellar-powered money wiring service on which six major international banks will launch their own fiat-currency baked stable coins or tokens. According to Jesse Lund, Vice President of IBM Blockchain and Stellar cofounder Jed McCaleb, as many as 44 international banks are using the IBM’s payment network – IBM Blockchain World Wire and many of them have signed the letters of intent to launch their own stable coins which are backed by fiat currency. The announcement was made at Money 2020 Asia in Singapore.
Launched in September 2018, The IBM payment network that uses the Stellar public blockchain. it enables the bank or regulated financial institutes to move the value internationally more quickly and cheaply compared to the traditional banking system. The high demand of the stable coins surged from the recent blood bath of the crypto market in 2018 where the greater volatility of the Bitcoin and Altcoin forced the investors to sell off their holdings. The newly launched stable coins include popular pairs such as Circle’s USDC, Gemini’s GUSD, and Paxos’ PAX. The surprising thing is that they are all backed by USD. One of the leading investment banking giants – JPMorgan Chase had also announced JPM Coin which was essentially called stable coin but has the same functionalities and purposes.
So far, the banks which are looking for their own stable coins include Brazil’s Banco Bradesco, South Korea’s Bank Busan, and the Philippines’ Rizal Commercial Banking Corporation. IBM has not announced the name of the remaining three banks. The signed banks’ stable coins would be backed by the Euro and Indonesian Rupiah. Currently, IBM’s World Wire supports 42 currencies and 44 banking endpoints for payments across 72 countries. The tech giant is looking forward to further expansion of the network to provide global coverage in three to five years that will enable the people to send and receive money across the globe.
“We let the market drive the expansion and selection of the network incrementally,” Lund said. “We are really feeling excited that we are on a roll to build something new and revolutionary that’s really going to change the landscape of cross-border payments.”
The goal of Word wire network is to eliminate the intermediaries that contribute to the complexity and excessive fees to cross-border payments. All the fiat currency transactions will be settled by using Steller’s XLM token and be recorded on the Stellar’s public blockchain. it will result in lightning fast, cheaper, and safer transactions for both parties.
It is expected that fiat-backed coins/stable coins will be the most prevalent in the nearby future. Centralizing the surging demand of the stable coins, Steve Ehrlich, chief operating officer of the Wall Street Blockchain Alliance said that “one-day stable coins will turn into their own various payment networks that almost become economies in their own regard, like loyalty programs.”