BIS paper finds stablecoins no panacea for cross-border payment costs

A Bank for International Settlements working paper comparing three cross-border payment channels finds that fintech money transfer operators have compressed costs far below traditional bank wires, while stablecoins carry structural limitations that undermine their billing as a wholesale fix for expensive international transfers.

The paper draws on intraday fintech pricing, World Bank remittance data, bank wire transactions, and crypto market data to construct comparable all-in cost measures across corridors and transfer sizes. For traditional bank wires, foreign exchange markups alone run from roughly 2% to 4.7% even for liquid currency pairs, before wire fees are layered on. Fintech operators such as Wise, Remitly, and Western Union’s digital arm substantially undercut that, with median costs for a US$10,000 transfer from the United States falling in the US$40 to US$60 range across developed-market currency pairs, though some corridors remain materially more expensive.

Stablecoin transfers fare more ambiguously. Converting between fiat and stablecoins still depends on crypto exchanges and other intermediaries whose trading, conversion, and withdrawal charges can erode much of any FX advantage. Liquidity between dollar-linked stablecoins and non-US currencies is described as generally very thin, and recipients may face delays while conversion and bank processing complete. Where stablecoins do show favourable pricing into certain emerging markets, the paper attributes this to capital-control distortions rather than any intrinsic technological edge, and flags volatile, shallow markets as a constraint on scaling such flows. The paper was discussed by Tobias Adrian.