Unlocking the potential of stablecoin for commercial banks

Challenge

The emergence of stablecoins, such as the JPM Coin and Wells Fargo Coin, has given rise to new – and highly efficient – methods of tracking and accounting, using digital assets. By allowing transactions to be shared between cost centres and P&Ls, via DLT, significant cost savings in reconciliation and auditing are possible. And the benefits go further much further than just efficiencies in accounting: the ownership and history of digital assets can be easily tracked and transacted between different internal or group stakeholders.

Solution

Despite the advanced and innovative nature of the method, however, involving participants outside an organisation is a major challenge. This challenge is that you cannot transact an internal banking stablecoin with other participants unless they are all on the same DLT network. Why? Because to do so requires DLT interoperability. As things stand with DLT, every owner of a digital asset has to invest in their own IT infrastructure merely to transact. Clearly, such a condition is unworkable.

Benefit

Quant technology is changing this situation, by allowing entire banking systems to seamlessly interconnect and interoperate. Flows of digital money that could previously only take place internally, will be possible between any participant, whether inside or outside the organisation. By opening up trade corridors for the interchange of stablecoins, we are enabling value creation not possible today.

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