Global Banks Form Alliance to Launch Stablecoin

A group of the world’s largest financial institutions is exploring the creation of a new form of stablecoin or digital money. Banks such as Bank of America, Goldman Sachs, Citi, and BNP Paribas are joining forces to create a reserve-backed digital asset. 

The project aims to make it usable on public blockchains. The banking giants revealed that the new digital currency will be backed by fiat currency reserves to maintain a stable value. 

Major Banks Explore New Stablecoin Initiative

In a joint statement released on October 10, BNP Paribas confirmed that several major banks are exploring the creation of a 1:1 reserve-backed digital currency. The goal is to provide a stable payment asset available on public blockchains, focused on G7 currencies.

Other participants in this initiative include Banco Santander, Barclays, Deutsche Bank, MUFG Bank Ltd, TD Bank Group, and UBS. Together, they want to see if a shared system could bring the benefits of stablecoin assets, like faster payments and more transparency. They also want to make sure it follows all regulations, and strong risk management standards will be a key part of the plan. 

This initiative has drawn attention from the crypto community, with many saying it is essentially a stablecoin, even though the banks have not called it that.

Banks Work With Regulators to Shape the Future of Digital Finance

The group of banks emphasized that they are already in discussions with regulators and supervisors in each relevant jurisdiction. They promised to keep in close contact with regulators as the project grows, making sure it follows all the rules. 

If it succeeds, it could change how big banks and companies make transactions. It would bring together the trust of traditional banking and the speed and transparency of blockchain technology.  Although some major banks have already shown interest in issuing stablecoins, this collaboration marks a significant shift. 

This plan comes after the Congress passed the GENIUS Act, a law aimed at establishing clear rules for payment stablecoins earlier this year. 

Stablecoin Market Led by Circle and Tether Continues to Grow Rapidly

The stablecoin market has been led for years by crypto-focused companies such as Circle and Tether, which are currently the two largest issuers in the world.  These companies have built their success by offering digital tokens that are linked to the U.S. dollar. 

This means that for every token they issue, they hold an equal amount of reserve assets. This system helps keep the value of the tokens stable and trusted by users.

At present, the total market capitalization of stablecoins is over $300 billion and that number is still rising. Experts believe the stablecoin industry could grow to reach  trillions of dollars in value within a few years. This expected growth is likely to come from increased institutional adoption, as banks, businesses, payment providers, and users begin to use digital currencies more frequently.