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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-backed stablecoins.
According to Jesse Lund, Vice President of IBM Blockchain and Stellar co-founder 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 stablecoins which are backed by fiat currency. The announcement was made at the Money 20/20 Asia conference in Singapore.
Launched in September 2018, the IBM payment network (which uses the Stellar public blockchain) enables banks or other regulated financial institutions to conduct international transactions more quickly and cheaply compared to the traditional banking system.
The rising high demand of stablecoins surged from the bloodbath of the crypto market in 2018, when the immense volatility of Bitcoin and altcoins forced investors to sell off their holdings, usually at a loss. The recently launched stablecoins 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. In addition, one of the leading investment banking giants, JPMorgan Chase, has announced the launch of JPM Coin which essentially has the same functionalities and purposes of other stablecoins.
So far, the banks that are looking for their own stablecoins 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’ stablecoins 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 for further expansion of the network to provide global coverage in three to five years that will enable people to send and receive money across the globe.
Jesse Lund stated:
“We let the market drive the expansion and selection of the network incrementally. 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 the Word Wire Network is to eliminate intermediaries that contribute to the complexity and excessive fees of cross-border payments. All the fiat currency transactions will be settled by using Steller’s XLM digital currency and will be recorded on Stellar’s public blockchain. it will result in executing fast, cheaper, and safer transactions for all parties.
There are some expectations in the crypto industry that fiat-backed stablecoins will be the most prevalent cryptocurrencies in the nearby future. IBM, which perhaps is the most crypto-invested tech company in the world right now, will surely push towards this direction with this new massive banking collaboration.