Japanese banks are testing stablecoin-based cross-border payments

editorial

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The cross-border transfer market reached a volume of $182 trillion in 2022. However, the G20 has identified four critical areas – cost, speed, access and transparency – that need to be improved.

The banks are working with digital asset infrastructure startup Progmat and blockchain company Datachain to see if stablecoins can solve these problems.

Project Pax’s cross-border transfer platform will use stablecoins and blockchains instead of correspondent banks. However, it will also leverage Swift’s existing banking API framework to direct Progmat to transact over blockchain networks.

This, according to participants, is because the role of Swift and banks in cross-border remittances in the real economy is diminishing due to considerations such as AML/CFT, regulatory compliance, operational frameworks and the challenges businesses face when using wallets remains crucial.

The pilot will begin shortly and there are plans to expand the collaboration to additional countries and financial institutions before potentially launching commercially next year.