New payment rails set to reshape the global financial landscape
The total circulating supply of stablecoins is expected to reach $1.6tn by 2030, with the potential to rise to $3.7tn
The global payments industry is are undergoing rapid change, reshaping how money moves across borders.
For decades, cross-border payments have relied on a network of correspondent banks, intermediaries and settlement systems.
But digital tokens are fast emerging as a potential alternative. They allow value to be transferred directly between users through digital wallets and distributed ledgers (DLTs), reducing the need for intermediaries and enabling transactions to be executed almost instantly.
At the centre of this shift is the rise of stablecoins.
A regulated stablecoin is a tokenised representation, designed to maintain a stable value by linking its price to a fiat currency. Unlike cryptocurrencies such as Bitcoin, whose prices can fluctuate significantly due to speculation and market sentiment, stablecoins are structured to remain relatively stable by anchoring their value to fiat currencies.
This stability is typically maintained by private issuers that hold reserves in highly liquid assets such as cash or short-term US Treasuries. In most cases, each digital token corresponds to a unit of fiat currency held in reserve.
“The combination of price stability and blockchain-based settlement has positioned stablecoins as a form of tokenised cash that can move across digital networks efficiently”, says Amith Rajan, head of wholesale digital banking and CEO for NeoVentures at Mashreq.
