Japanese banks MUFG, SMBC, and Mizuho are participating in a pilot program that leverages stablecoins and the Swift network for cross-border payments.
The cross-border transfer market reached a staggering $182 trillion in 2022. However, the G20 has identified four critical areas—cost, speed, access, and transparency—that require significant improvements.
These banks are collaborating with digital asset infrastructure startup Progmat and blockchain firm Datachain to evaluate whether stablecoins can effectively address these challenges. The Project Pax platform will utilize stablecoins and blockchains as alternatives to correspondent banks, while also employing Swift’s existing API framework. This approach allows banks to instruct Progmat to settle using blockchain networks.
Participants emphasize the continued importance of Swift and traditional banking roles in cross-border remittances, citing factors such as anti-money laundering (AML), counter-financing of terrorism (CFT), regulatory compliance, operational frameworks, and the complexities businesses experience when using digital wallets.
The pilot program is set to begin soon, with plans to broaden collaboration to additional countries and financial institutions ahead of a potential commercial launch next year.