Japan's largest bank, MUFG, has partnered with digital asset platform, Progmat, blockchain trade finance specialist, Standage, and enterprise wallet developer, Ginco, to explore the viability of using permissionless blockchain stablecoins for international trade settlements.

This joint collaboration is aimed specifically at helping Japanese exporters do business with buyers in emerging markets that find it difficult to access letters of credit (L/Cs).

Stablecoins are a type of cryptocurrency designed to minimise the price volatility commonly associated with cryptocurrencies like Bitcoin and Ethereum.

Joint exploration

During 2024, the joint exploration aims to create the first use case in Japan to address current challenges facing emerging trade markets - with a total market size exceeding US$10 trillion and where fair transactions in US dollars are hindered by foreign exchange regulations and restrictions on the use of L/Cs.

Through integration between MUFG's and the fintechs' solutions, the joint collaborators believe it is now possible to deliver quick, reliable and secure international and inter-corporate settlements.

Roles and responsibilities

Progmat is heading development of the Progmat Coin platform, MUFG is handling practical aspects of the trust-type Japanese stablecoin scheme, Standage is leading development of the stablecoin based trade settlement system, and Ginco is supporting the trade wallet development.

The collaborators say that with this combination of resources and capabilities, they expect to deliver real-world use cases for Japanese trade-related companies, taking the first step towards a practical implementation of a fully compliant Japanese stablecoin based trade settlement system.

Completion of a beta version is anticipated by around spring 2024, with the objective of providing official release within the same year.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.