These new and innovative digital assets are designed to maintain a stable value against a specific asset, such as the Great British Pound. Currently, many stablecoins are pegged to the US dollar (USD), which makes up a huge 91% of stablecoin usage.
As mentioned in a recent report, the UK economy is losing out on £20B annually due to the fact that most of the British corporate crypto sphere uses US dollar stablecoins to transact. However, the rise of GBP stablecoins has the potential to change this and to impact the global economy in a number of ways, particularly when it comes to UK imports and exports.
There are several benefits of using stablecoins in international trade, including:
Faster and cheaper transactions: Using stablecoins for international trade can eliminate the need for traditional financial intermediaries such as banks, which can be slow and expensive. Stablecoin transactions can be settled quickly and at a lower cost, allowing for faster and more efficient cross-border payments.
Reduced currency risk: Stablecoins are designed to maintain a stable value relative to a fiat currency, such as the US dollar. This means that businesses using stablecoins can avoid currency fluctuations and reduce the risk of currency exchange rate losses.
Increased transparency: Stablecoin transactions are recorded on a blockchain, providing greater transparency and accountability for all parties involved in the trade. This can help to reduce the risk of fraud and improve trust between trading partners.
Accessibility: Stablecoins can be used by anyone with a digital wallet, regardless of location or access to traditional banking services. This can help to increase financial inclusion and enable businesses in developing countries to participate in international trade.
Programmability: Stablecoins can be programmed to execute specific actions automatically, such as releasing payment upon receipt of goods or triggering a smart contract. This can help to streamline the trade process and reduce the need for intermediaries.