Today Japan’s largest bank, MUFG, announced a project to explore permissionless blockchain stablecoins for trade settlement with emerging markets, particularly for Japanese exports. The aim is to provide a similar level of certainty of payment as a letter of credit without the need for a bank guarantee (or credit).
The study also involves three other firms. Progmat is the MUFG-founded DLT platform for tokenization and stablecoins, which now has other investors. It has the Progmat Coin solution that supports multiple stablecoin issuers. Japan’s Standage specializes in export settlement. Ginco is a web3 wallet firm that already collaborates with Progmat and MUFG.
They mention that importers from emerging markets are currently having challenges with U.S. dollar usage for cross border payments. In particular, they note issues with foreign currency restrictions, sanctions and restrictions on using letters of credit. It’s unclear how a stablecoin would help with the foreign currency restrictions and sanctions.
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