BIS Paper: Stablecoins Can Reduce Cross-Border Settlement Friction, But Remain Constrained by On/Off-Ramp Costs and Liquidity
The Bank for International Settlements (BIS) published Working Paper No. 1385 comparing the cross-border payment costs of traditional banks, fintech remittance providers, and stablecoins. The paper notes that stablecoins can complete cross-border transfers via networks including Ethereum, Solana, and Tron, reducing reliance on correspondent banks and SWIFT. Stablecoins pegged to major currencies can achieve exchange rates close to wholesale foreign exchange rates, with low on-chain transfer fees. However, the full "fiat currency - stablecoin - fiat currency" workflow still involves transaction, withdrawal, and on/off-ramp fees. Stablecoins restructure intermediary segments rather than eliminating intermediaries entirely. Insufficient market depth also limits the cost advantage for large-value payments, while the competitive edge of stablecoins in some emerging markets is tied to capital controls and local demand for U.S. dollars.
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