Ten banking giants are going after stablecoins. They are trying not to miss the digital money train

A consortium of ten of the world’s largest banks, including Bank of America, Goldman Sachs, UBS, Santander and BNP Paribas, have announced that they are exploring creating their own stablecoins, according to Reuters.

Why is it important. It is the first time that a consortium of this magnitude has officially reacted to the threat posed by stablecoins (stablecoins) for your business.

What has happened. The consortium has made this announcement regarding this development. They would be digital assets anchored 1:1 to the main G7 currencies (dollar, euro, pound, etc.) and, key, they would work on public blockchains, the same technology used by the crypto world.

The advertisement seeks to stand up to the absolute dominance of Tethera single company that currently manages a volume of 179 billion dollars outside the traditional banking system.

The small print. This movement does not come so much in a context of innovation as in a crisis management room:

• The money that Tether moves is money that escapes the control and commissions of the SWIFT system.
• The bank is not creating something new, it is trying to build its own version of something that already exists, works on a large scale and is taking over their ground.

The great contradiction is that, to compete, they must use a technology (blockchain) designed explicitly to eliminate intermediaries. The business model of a bank is, precisely, to be that intermediary. They are forcibly adopting the foundations of technology that threatens to erode an increasing part of their business.

And now whatand. The ball is now in the court of governments and central banks. For a regulator, a stablecoin issued by a private bank continues to be a threat to monetary sovereignty. This movement only serves to hurry them up in the development of their own digital currencies (the famous CBDC).

A CBDC controlled by the European Central Bank or the Federal Reserve could, in the long term, render obsolete both stablecoins of Tether as those now proposed by banks. The banking consortium, in its attempt not to be left behind, may have only managed to accelerate the arrival of a much more powerful competitor: the State itself.

In Xataka | It is not bitcoin or Ethereum: Tether is the stablecoin that has turned its creators into emperors of finance

Featured image | Alicja Ziajowska