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Stablecoins, once synonymous with crypto speculation and opaque reserves, are fast becoming the backbone of a new era in institutional cross-border settlement.
Stablecoins and Cross-border payments
What began as a niche experiment in digital money is now being reimagined by banks and global payment networks as a trusted, programmable layer to move value across borders — faster, cheaper and with greater transparency than legacy systems allow.
The logic behind this shift is clear.
Cross-border payments remain notoriously inefficient, often routed through chains of correspondent banks, each introducing compliance checks, fees and settlement delays.
Capital is tied up in prefunded nostro accounts across jurisdictions, creating both cost and liquidity drag.
Stablecoins promise to compress that process into seconds rather than days — delivering near-instant settlement, richer data flows and on-demand liquidity.
From Speculation to Settlement
What distinguishes the current wave of stablecoin innovation is its institutional character.
Global payment networks are embedding tokenised money directly into their rails, reframing stablecoins not as crypto curiosities but as treasury management tools.
Visa, for instance, recently launched a pilot enabling institutions to prefund balances in stablecoins for Visa Direct disbursements, allowing corporates to pay out globally in minutes while recipients still receive fiat.
The company’s language is revealing: stablecoins are being treated as “money in the bank”, not a digital gamble.
Mastercard has taken a similar approach, developing tokenised settlement mechanisms that plug into existing infrastructure rather than replacing it.
The emphasis is on interoperability, compliance and continuity — the hallmarks of a payment system that corporates can trust.
These developments point to a future where stablecoins are not the parallel universe of payments, but its connective tissue.
Banks Build Their Own Rails
Banks are no longer watching from the sidelines.
In Europe, a consortium of nine major institutions recently announced plans to issue a euro-denominated stablecoin under the EU’s new MiCA regulatory framework — a clear step toward a compliant, bank-backed alternative to privately issued tokens.
Elsewhere, collaborations like Circle’s partnership with Finastra are giving banks access to stablecoin settlement infrastructure without having to overhaul their customer-facing systems.
Fiat payments can now settle in USDC behind the scenes, combining regulatory familiarity with blockchain efficiency.
This hybrid model — fiat on the front end, tokenisation in the back — is gaining traction as banks recognise the operational gains from just-in-time liquidity and real-time reconciliation.
Bridging the Divide
Yet challenges remain. Stablecoin ecosystems are fragmented across multiple blockchains — Ethereum, Solana, Avalanche and others — requiring bridges to move value between them.
These bridges introduce liquidity gaps, operational complexity and, in some cases, security vulnerabilities. Indeed, bridge hacks have historically accounted for around 40% of total value lost in the crypto sector.
To scale securely, banks and payment networks will need to standardise cross-chain settlement, create governed liquidity pools and provide the oversight that the open crypto world has often lacked.
If 2023 was the year stablecoins matured, 2025 may be the year they institutionalise.
With banks and networks now embedding tokenised settlement at the heart of their operations, the line between traditional finance and digital assets is fast dissolving — and cross-border payments may finally be catching up with the speed of the modern economy.
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