Earlier today, IBM officially revealed the launch of its ambitious project ”IMB Blockchain World Wire”. Specifically, World Wire is a payment network which utilizes the Stellar blockchain. Moreover, this network aims to facilitate cross-border transactions for regulated institutions.
Six banks have already signed letters of intent to issue stablecoins
Perhaps most notably, IBM also announced that six international banks have already signed letters of intent to issue stablecoins on World Wire. These fiat-backed stablecoins will reportedly be launched as soon as the responsible banks receive regulatory approval.
Furthermore, three of the signed banks have supposedly already been identified, and are said to consist of the South Korean Bank Busan, the Brazilian Banco Bradesco, and the Philippines-based RCBC.
In addition to this, the three other banks involved will supposedly issue stablecoins based on the Indonesian rupiah as well as euros.
IBM describes World Wire as a system that is designed ”to optimize and accelerate foreign exchange, cross border payments and remittances.” Furthermore, World Wire is said to have enabled payment locations in ”72 countries, with 47 currencies and 44 banking endpoints.”
According to IBM’s official announcement:
”World Wire is the first blockchain network of its kind to integrate payment messaging, clearing and settlement on a single unified network, while allowing participants to dynamically choose from a variety of digital assets for settlement.”
Furthermore, Marie Wieck, the General Manager of IBM Blockchain, noted that ”[IBM has] 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.”
Nevertheless, some will argue that the most intriguing aspect of this announcement is that the World Wire network features support for Stellar Lumens.
World Wire utilizes the Stellar protocol in order to provide ”a more straight-through model for cross border payments using the Stallar protocol that makes money transfers point-to-point in lieu of the complexities of conventional correspondent banking.”
However, although the six aforementioned banks are waiting for regulatory approval, a US dollar-backed stablecoin from the San Francisco-based startup Stronghold is already said to be running on World Wire.
”The network already supports settlement using Stellar Lumens and a U.S. dollar stable coin through IBM’s previously-announced collaboration with Stronghold.”
There is a tipping point coming
Due to World Wire’s use of the Stellar blockchain, it is also possible that banks could potentially go on to utilize Lumens as a form of ”bridge currency”. However, no banks have currently announced public plans for this.
With that being said, however, IBM’s head of blockchain for financial services, Jesse Lund, commented on the great potential brought by the launch of IBM’s blockchain-based World Wire.
Lund admitted that the current systems used for monetary cross-border settlements are too slow to be effective. As such, he noted that the friction in settling cross-national transactions needs to be dramatically lowered – with blockchain technology being the answer.
”There is a tipping point coming and blockchain – in particular, digital currencies – this notion of being able to have a monetary store of value that can move as easily as email, as information can move, is really kind of the next thing. Blockchain changes the dynamic, in that you eliminate the need to have intermediaries, you’re just dealing with the two end-party actors, it’s more point-to-point, so it reduces friction.”
Rasmus Pihl is a writer for Toshi Times by day and an avid follower of the blockchain industry by night. Rasmus holds a Bachelor’s Degree in Marketing from the Gothenburg School of Business, Economics, and Law and runs a Swedish marketing consulting firm. Moreover, when he isn’t writing for Toshi Times, traveling, working or changing the world in some other capacity, Rasmus is more than likely caught up in postgraduate studies.