- Six banks are signed up with IBM’s BWW
- The BWW is designed to accelerate remittances and transform cross-border payments
- Banks will XLM as a bridge currency
IBM is heralding its banking clients into the world of cryptocurrencies. Six international banks have signed letters of intent to introduce their stablecoins via IBM’s now live blockchain-based payments network the “World-Wire.”
According to financial news outlet Cheddar on March 18, 2018, IBM and Stellar jointly announced during a keynote speech at the Money 2020 Asia in Singapore.
IBM stated that so far its Blockchain World Wire (BWW) payment network has facilitated payment locations in 72 countries, with 47 currencies and 44 banking endpoints that include banks like Banco Bradesco, Bank Busan, and Rizal Commercial Banking Corporation that will issue their Stablecoins on IBM Blockchain World-Wire.
Facilitate Real-Time International Settlements between Banks
IBM’s cross-border payment network BWW that is now live was launched in September 2018 in collaboration with Stellar aims to leverage cryptocurrencies to facilitate real-time international settlements between banks. IBM Blockchain General Manager Marie Wieck stated:
“We’ve created a new type of payment network designed to accelerate remittances and transform cross-border payments to facilitate the movement of money in countries that need it most. By creating a network where financial institutions support multiple digital assets, we expect to spur innovation and improve financial inclusion worldwide.”
IBM’s network went live on Monday, March 18, 2019, and while the partner banks are awaiting authorization from their respective regulators, there is already one stablecoin that’s running on the World-Wire.
A San-Francisco based startup Stronghold created the U.S dollar-backed stablecoin. According to IBM’s head of Blockchain for Financial Services Jesse Lund, while Stronghold’s USD-backed coin is currently serving as an on-ramp for greenbacks, there doesn’t yet exist pay-in/pay-out locations in the United States adding that it is on limited production. Lund stated that IBM has so far received “a favorable verbal response” from regulators in this case and added:
“So we are starting with markets that are outside of the U.S., but it won’t be long before we add the U.S. as an operating endpoint. It will be sometime this year; we will get to it, third quarter, fourth quarter something like that.”
2018 Bearish Market Occasioned the Creation of Stablecoins
Apart from issuing their tokens, the deal enables the banks to use Stellar Lumens (XLM) as a bridge currency when they cannot trade one type of fiat currency for another. The World Wire could also support other cryptos, but according to Lund, at the moment it is only supporting XLM because financial institutions are wary of the volatility of cryptocurrencies.
The cryptocurrency industry’s 2018 bearish market occasioned the creation of a flood of stablecoins which aim to remain stable in the face of high volatility in Bitcoin and other cryptocurrencies. The leading stablecoins include Circle’s USDC, Paxos’ PAX, and Gemini’s GUSD, all of which are backed by the U.S dollar.
JPMorgan Chase announced the creation of the JPM Coin last month, which is a dollar-backed bridge currency for institutional clients.