South Korea’s Shinhan Bank has successfully conducted a feasibility test for stablecoin remittance payments using Hedera’s distributed ledger technology. The project aimed to address issues related to cross-border payments, such as high fees, lengthy settlement times, and the lack of tracking features. Several financial institutions, including SCB TechX from Siam Commercial Bank, participated in the pilot.
According to Byunghee Kim, the leader of blockchain at Shinhan Bank, Stablecoins offer a cost-effective, fast, and reliable method of transferring value across borders. This can contribute to increasing financial inclusion and improving access to financial services for individuals and businesses in underserved communities.
The stablecoin remittance pilot is compatible with the Ethereum Virtual Machine (EVM) and utilizes Hedera’s smart contract capabilities. Hedera states that stablecoin issuers based on EVM will be able to participate in future pilots using the same tested framework.
Byunghee Kim further stated that the use of Hedera’s EVM-compatible technology in the next phase demonstrates how it eliminates intermediaries, reduces costs, and expedites the remittance process.
Traditional remittance processes incur an average cost of 6% according to the World Bank. Cross-border transfers between countries with limited liquidity and network connections often involve high intermediary fees. These transactions can take three to seven days to process, with no visibility for customers regarding the transaction’s progress.
Shinhan Bank’s stablecoin solution claims to provide individuals and organizations with the ability to send and receive funds denominated in a local stablecoin at significantly lower fees compared to the traditional remittance process. Byunghee Kim added that the successful completion of this project is a significant step toward making cross-border payments faster, cheaper, and more accessible worldwide.
Here, it is clear that banks are showing their interest in cryptocurrencies for cross-border payments, whether it’s stablecoin or altcoin. On the other hand, many countries are also taking part in central bank digital currencies (CBDCs) for cross-border payments. However, some countries are adopting CBDCs over cryptocurrencies.
Recently, Bank of America praised Ripple for its innovative solutions and the potential to change the global financial industry. They recognized Ripple’s role in making trade documents digital and improving cross-border payments. Bank of America commended Ripple for its ability to settle transactions quickly, making them more efficient and transparent. Ripple’s use of the digital asset XRP allows for fast transfers, reducing costs, and eliminating middlemen.
Meanwhile, Ripple already has partnerships with many leading financial institutions such as American Express, the Saudi Arabian Monetary Authority, Banco Santander, and many others.
Furthermore, the Reserve Bank of India (RBI) is also getting closer to launching a digital version of the Indian Rupee. They have been in talks with central banks from 18 countries about using this digital currency for cross-border transactions. Banks from these countries have already opened accounts to hold deposits in Indian Rupees. The RBI Governor believes that the digital Rupee can help countries facing a shortage of US Dollars to import goods from India.