A study by the Bank of Italy finds stablecoins do not provide significant advantages in transfer costs or speeds compared to traditional methods.
The Bank of Italy's latest research indicates that stablecoins do not provide notable benefits in cost or speed for money transfers. The advantages that might exist are countered by conversion fees to and from fiat currencies and inefficiencies in local payment systems.
The study examined the transfer of 200 USDC across ten corridors between Italy and countries including Brazil, Argentina, Japan, the UAE, and South Africa, comparing costs and processing times to traditional money transfer services.
Transfer costs for stablecoins varied significantly, ranging from 0.3% to nearly 9%, based on the corridor. In areas with instant payment capabilities, transactions were completed in under 20 minutes, whereas regions without such services experienced delays of one to two business days.
The findings highlighted that the main sources of cost and delay stemmed from currency exchange and local infrastructure quality, with blockchain fees being a lesser concern.
While the World Bank reports the average global remittance cost at 6.65%, stablecoins were generally found to be cheaper in most analyzed corridors. However, compared to Wise, stablecoins only showed cost benefits in three out of seven routes studied.
The authors of the report noted that the real advantages of stablecoins would be clearer if they could be used directly for purchases without needing to convert to local currencies. They also emphasized that stringent regulations do not reduce the demand for stablecoins, but they do complicate their accessibility for everyday users.
Additionally, it is important to note that the total market capitalization of stablecoins fell by over $10 billion in July, dropping to around $310 billion, marking the most significant decline since the Terra collapse in May 2022.
