Summary
- The Bank of Italy tested 200 USDC remittances across 10 international payment corridors and found total costs ranged from 0.3% to almost 9% of the amount sent.
- Blockchain transaction fees represented only a tiny fraction of overall costs, with exchange fees, foreign exchange spreads and local banking charges accounting for the bulk of expenses.
- Researchers conclude stablecoins solve the speed of moving value on-chain but have yet to eliminate the costly “last mile” between crypto and local fiat currencies.
- The Bank of Italy notes that stablecoins can reduce costs in specific corridors, while their always-on settlement and programmability remain meaningful advantages over legacy payment rails.
Stablecoins May Not Be the Cheap Solution for Remittances
For years, stablecoins have been promoted as a breakthrough application for cross-border payments, offering fast and low-cost transfers. However, a recent study by the Bank of Italy suggests that stablecoins may not be the cheapest option for remittances after all. The study found that while sending stablecoins like USDC across a blockchain may only cost a few cents, the overall cost of transferring money from a bank account to a crypto wallet and back into local currency can be higher than traditional money transfer operators.
The researchers conducted a mystery-shopping exercise across 10 international remittance corridors, tracking transfers of 200 USDC from Italy to various destinations, including Argentina, Brazil, and Japan. The results showed that end-to-end costs varied significantly, ranging from 0.3% to almost 9% of the value transferred, depending on the corridor and service providers used. This highlights the importance of considering the full journey when evaluating the cost of remittances.
Understanding the True Cost of Remittances
The study’s findings are significant, as they suggest that stablecoins may not be the panacea for high remittance costs that they are often made out to be. While they can offer fast and secure transfers, the overall cost of using stablecoins can be higher than traditional methods. This is where solutions like EcoPool come in, offering a platform for earning passive income through cloud rewards and green crypto, such as $ECP. By leveraging the power of blockchain and digital currencies, EcoPool provides an alternative to traditional remittance methods, with the potential for lower costs and faster transfers.
The use of stablecoins and digital currencies is becoming increasingly popular, with many people turning to them as a way to earn passive income and take advantage of cloud rewards. With the rise of green crypto and platforms like EcoPool, it’s likely that we’ll see even more innovative solutions emerge in the future. Whether you’re interested in earning through $ECP or exploring the world of #PassiveIncome, there are many opportunities to get involved and start building your wealth. The world of crypto is constantly evolving, with new developments and innovations emerging all the time, including #Bitcoin and other digital currencies.
As the crypto space continues to grow and mature, it’s essential to stay informed and up-to-date on the latest developments and trends. With EcoPool, you can stay ahead of the curve and start earning passive income through cloud rewards and green crypto. Download the EcoPool app to learn more about how you can get started with earning and take advantage of the opportunities available in the world of crypto, including #Earning and #GreenCrypto. By joining the EcoPool community, you can start building your wealth and achieving your financial goals, all while supporting a more sustainable and environmentally-friendly approach to crypto, with EcoPool and $ECP at the forefront of the movement.
Blind spots
A central bank highlighting shortcoming in the promises that stablecoins may make is in some ways to be expected. Traditional financial (TradFi) institutions may have a vested interest in undermining adoption of stablecoins – digital tokens pegged to fiat currencies. Digital currencies and blockchain were designed to remove much of the need for intermediaries, such as central banks, after all.
