CEBR and BNVK Reports Stablecoins Can Free Up $11.6 Billion

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As a researcher with a background in economics and a focus on financial technologies, I have been closely following the development of stablecoins over the past decade. The new analysis by BVNK and Cebr sheds light on the significant economic impact of these digital currencies, which I find particularly intriguing given my professional interest.

On the 10-year anniversary of the first stablecoin’s debut, BVNK, a leading B2B payments provider, in collaboration with Cebr, the Centre for Economics and Business Research, has released an analysis shedding light on the economic consequences of stablecoins as their market capitalization surges to $160 billion. This groundbreaking report provides the first clear numerical connection between the growth of stablecoin adoption and its economic implications.

The Economic Impact of Stablecoins revealed

A new analysis from Cebr highlights the key impacts of fiat-backed stablecoins on the economy:

  1.  Mitigating costs of currency volatility: 

As a researcher studying the financial landscape of emerging economies, I’ve discovered that stablecoins, which are primarily pegged to the US dollar (accounting for over 99% of their market capitalization), can serve as a valuable tool in helping offset GDP losses caused by local currency volatility. On average, these losses amounted to approximately 9.4% of GDP across the 17 countries I examined since 1992. Notably, Indonesia and Brazil suffered significant losses totaling $184bn and $172bn respectively.

  1. Bridging the dollar gap:  

In place of the US dollar’s digital equivalent, stablecoins cater to the worldwide need for a steady and globally accessible currency, particularly in areas with restricted access. A study by Cebr in 17 countries revealed a substantial desire for stablecoins among emerging economies. Businesses and individuals were found to be willing to pay an average markup of 4.7% above the standard dollar rate to acquire stablecoins, with this figure climbing as high as 30% in countries like Argentina. By 2027, it is projected that these 17 nations will collectively pay approximately $25.4 billion just in premiums for gaining access to stablecoins.

  1.  Releasing trapped capital:  

Modern cross-border payment methods are infamous for causing considerable delays in transferring funds, restricting the use of working capital, and obligating financial institutions to maintain pre-funded accounts as a precaution against risk. A recent study by Cebr revealed that an impressive $11.6 billion is tied up in long settlement delays across four major B2B (business-to-business) transaction routes alone. This capital remains inaccessible for expansion, constituting a substantial missed opportunity cost for businesses.

Stablecoins are accelerating global financial transactions: it’s projected that by 2024, there will be approximately $2.8 trillion in cross-border stablecoin payments. These transactions will deliver funds 3-6 days faster than traditional methods along the analyzed routes. For businesses, particularly small and medium enterprises (SMEs), this means improved cash flow, reduced borrowing costs, and heightened operational effectiveness. The financial gain is substantial: an estimated $2.9 billion in savings across four routes, accounting for roughly 10% of total cross-border payments volume by 2027. Moreover, stablecoins facilitate near-instant settlements, eliminating the necessity to maintain pre-funded accounts, potentially unlocking over $5 trillion in previously immobilized capital.

Ben Reynolds, the MD of BVNK US, pointed out: “Companies are expanding their supply chains and broadening their customer bases internationally. Yet, securing robust fiat currencies and swiftly transferring funds across borders remain significant challenges for numerous businesses. These issues not only cause inconvenience but also directly affect their capital productivity and cash flow. Stablecoins represent a game-changing solution, enabling instant global transactions between buyers and sellers, offering businesses an effective replacement to the current inefficient cross-border payment systems.”

Nina Skero, CEO at Cebr, stated: “Slow payment systems and local currency volatility result in lost opportunities for businesses and economies. In collaboration with BVNK, we’ve been investigating how the widespread adoption of stablecoins addresses these challenges. Some advantages include expediting transactions, freeing up capital for use in productivity, and discovering that in selected payment corridors accounting for around 10%, accelerated stablecoin transfers could generate an additional $2.9 billion in economic output by 2027.”

As a crypto investor, I’m excited about the growing stability and potential of the stablecoin market. Industry experts predict that the market cap will surge from its current $160 billion to a staggering $1 trillion in the coming years. With this growth, the payment volumes could hit an impressive $15 trillion by 2030.

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2024-07-25 09:08