Japan’s major banks back new stablecoin project for global trade

Update Sept. 11, 06:40 am UTC: This article has been updated to commentary from Datachain.

Datachain, a blockchain startup focused on interoperability, announced the launch of Project Pax, a stablecoin platform to facilitate cross-border business settlements.

According to the Sept. 5 official post, Japan’s three largest banks, Mitsubishi UFJ Bank, Sumitomo Mitsui Banking Corporation, and Mizuho Bank, are backing the initiative.

The project is a collaboration between blockchain companies like Datachain, Progmat, and TOKI, with expectations of global participation from financial institutions.

Speaking with Cointelegraph, Motoki Yoshida, the marketing manager at Datachain, explained that the platform will “initially focus on B2B cross-border transfer use cases.”

“The major Japanese banks joined this initiative because they expect stablecoin cross-border transfers to improve the existing system, offering more efficient solutions for their clients.”

Cross-border inefficiency

The $182 trillion global cross-border payments market faces substantial inefficiencies in speed, accessibility, and cost despite remaining a primary focus for financial institutions.

According to the post, the G20 identified these inefficiencies alongside the need for “significant improvements” to transparency.

“In this market, Progmat and Datachain aim to leverage stablecoins to enable fast, cost-effective, and 24/7 operational cross-border transfers.”

Yoshida told Cointelegraph about the long-term effects of the initiative on institutional handling of financial transactions.

“Institutions will be able to integrate stablecoin cross-chain transfers. As the stablecoin market cap continues to grow, having a stablecoin transfer feature in their cross-border systems will become increasingly valuable over time.”

Stablecoins as a tool for enterprise

Project Pax aims to address the inefficiencies highlighted by the G20 by integrating stablecoins into the international business settlement process

The initiative seeks to change the limited adoption of fiat-pegged cryptocurrencies for traditional business operations by using stablecoins as an enterprise payment tool.

According to the post, the stablecoin platform will “utilize Swift’s existing API framework for banks to instruct Progmat to settle on blockchain.”

“[This addresses] AML/CFT, regulatory compliance, and operational setup challenges, while also considering the difficulties businesses face in using wallets. [Enabling] financial institutions to avoid operational redundancy with fiat currency transfers and minimize investment costs.”

Bank of Japan rate hike topples Bitcoin

As of Sept. 3, Bitcoin (BTC) price had fallen 6.5% with no sign of slowing. Traders attributed the downtrend to statements issued by the Bank of Japan (BoJ), rekindling fears of recession.

In a document issued to a government panel, BoJ Governor Kazuo Ueda stated the central bank’s policy decision in July, indicating that the regulator would continue to hike interest rates.

The statement prompted traders with a stark reminder of late July, when the benchmark rise saw an unwinding of Japanese Yen carry trades and the destabilization of risk assets, like BTC.

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