AMERICAS FINANCE
The Case for Stablecoins in Growing Regions Around the Globe Facebook and JPMCoin Suggest Mainstream Potential for Stablecoins Global projects like Facebook Libra and JPM Coin have captivated the world with the potential that stablecoins (cryptocurrencies pegged to assets with perceived relative stability like the USD, the Swiss Franc—even gold or silver) might move to the mainstream sooner than some have envisioned. Planned for launch as early as 2020, Libra will be backed by a reserve of real-world assets, including bank deposits and short-term government securities 1 , making it more stable than other cryptocurrencies, while giving it an instant platform. Although its fate remains uncertain considering Facebook’s regulatory and privacy probes, Libra was positioned from the start as a direct challenge to existing central banking systems: “a more efficient, low-cost and secure alternative payment tool for people who can’t afford to transfer money using traditional methods,” according to the company 2 . Also, this year, J.P. Morgan announced it had become the first U.S. bank to create and successfully test a stablecoin, saying its JPM Coin has the potential to transform global banking payment transfer for its institutional clients, 3 an alternative to less efficient legacy bank payment systems such as SWIFT. Lesser Known Challenges that Stablecoins Can Solve While Libra and JPM Coin have captured the world’s attention for its mass market potential, the real sizzle for stablecoin is a ground game of real-world local use cases that are getting surprisingly little attention. Beyond the news headlines, what lesser known regional challenges are stablecoins uniquely positioned to address?
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In partnership with the private sector, a groundswell of regions around the globe are turning to stablecoin to solve a range of problems, including digital payments, financial inclusion and infrastructure development. Whether consuming or providing services, municipalities comprise a vast ecosystem of contractors, consultants and agencies that need to interact and transact in order to maintain a region’s social infrastructure. However, the way these counterparties interact and transact – even in highly developed regions with ample resources like New York City – the provision of local services is often mired in complexity, fraud and inefficiency. An even stronger case can be made for stablecoins in jurisdictions facing a range of acute challenges, such as access to banking services, transaction pricing opacity, fraud and settlement delays. Sidestepping some of the grand global use cases like Libra that trigger contentious geopolitical issues like
