BIS Paper: Stablecoins can reduce cross-border settlement friction, but liquidity still constrains large payments
BIBIBI
AT A GLANCE
BIS Working Paper No. 1385 states that stablecoins can reduce certain cross-border payment frictions, but on-ramp and off-ramp costs and market depth remain constraints.
Article
【BIS Paper: Stablecoins reduce cross-border settlement friction, but remain constrained by liquidity]
The Bank for International Settlements (BIS) released Working Paper No. 1385, comparing the costs of cross-border payments through traditional banks, fintech remittance providers, and stablecoins. The paper states that stablecoins can complete cross-border transfers via networks such as Ethereum,Solana and Tron, reducing reliance on correspondent banks and SWIFT. The paper states that stablecoin exchange prices for major currencies can approach wholesale foreign exchange rates, while on-chain transfer fees are relatively low. However, the full fiat–stablecoin–fiat process still involves trading, withdrawal, and conversion fees. Stablecoins restructure intermediaries rather than eliminating them. Insufficient market depth limits their cost advantage for large payments, while the related advantages in some emerging markets are associated with capital controls and USD demand.
Key points
01
The Bank for International Settlements (BIS) released Working Paper No. 1385, comparing the costs of cross-border payments through traditional banks, fintech remittance providers, and stablecoins.
02
The paper states that stablecoins can complete cross-border transfers via networks such as Ethereum, Solana, and Tron, reducing reliance on correspondent banks and SWIFT.
03
The paper states that stablecoin exchange prices for major currencies can approach wholesale foreign exchange rates, while on-chain transfer fees are relatively low.
04
The full fiat–stablecoin–fiat process still involves trading, withdrawal, and conversion fees.
05
The paper concludes that stablecoins restructure intermediaries rather than eliminating them.
06
Insufficient market depth limits the cost advantage for large payments.
07
The related advantages in some emerging markets are associated with capital controls and USD demand.
AI-assisted interpretation
The following is analysis, separate from reported facts. Verify important claims independently.
Stablecoins can be transferred across borders using blockchains, bypassing some traditional correspondent banks and SWIFT steps, making certain transfer stages potentially cheaper. However, users generally still need to purchase stablecoins with fiat currency and sell or withdraw them at the receiving end, and these steps still incur fees. Large transactions may also lose their cost advantage because of insufficient market depth.
Why it matters to readers
This study examines whether stablecoins can improve the efficiency of cross-border payments, while noting that on-chain transaction fees alone should not be considered; the liquidity involved in purchases, conversions, withdrawals, and large transactions also affects total costs.
When assessing cross-border stablecoin transfers, beginners should compare all costs from purchasing with fiat currency through final withdrawal, rather than comparing only on-chain transfer fees.
Risks and unknowns
The evidence is based on a summary of the paper and does not provide a link to the BIS original paper, so its specific calculation methodology and scope of application cannot be verified from the available materials.
The evidence provides no specific fee figures and does not specify which countries, currencies, or transaction sizes can obtain a cost advantage.
The available text does not elaborate on the specific relationship between advantages in some emerging markets and capital controls and USD demand.
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Related concepts
Stablecoin
An asset that seeks to track a reference value and is subject to risks including depegging, reserves, and redemption.
