A new proof-of-concept will be used to transport fiat-backed stablecoins between banks in order to cut international payment costs and transaction delays.
Shinhan Bank of South Korea and Hedera Hashgraph (HBAR) have created a proof of concept for international money transfers through stablecoins on the Hedera Network.
The innovative proof of concept for remittances developed by South Korea’s Shinhan Bank demonstrates how money may be sent abroad in seconds for a fraction of a penny through the Hedera Network.
Hedera states that the average transaction charge on their network is $0.0001 and the average transaction time is 3-5 seconds, both of which are significant improvements above what is presently accessible via regular transfers.
Hedera announced in a Nov. 29 release that it is examining whether it is feasible to generate and distribute stablecoins for financial use cases with cheaper costs and faster transaction times than current systems, while simultaneously ensuring transaction traceability.
Hedera Hashgraph is a proof-of-stake, public Distributed Ledger Technology (DLT) network with a high level of security. The proof of concept, which establishes the feasibility of a certain approach or idea, makes use of the Hedera Token Service (HTS) and Hedera Consensus Service (HCS).
Shinhan Bank intends to mint stablecoins backed by the Korean Won (KRW), while overseas partner banks participating in the pilot would issue stablecoins in their local currency. Bank customers who receive KRW stablecoins will be able to trade them for local currency stablecoins, which may then be converted to local fiat money.
Using blockchains to reduce costs on international remittances is an important use case. According to Remittance Prices Worldwide’s December 2020 report, the worldwide average cost of transferring $200 across national boundaries using conventional banks was 6.51 percent ($13.02). By 2030, the average is predicted to shrink to 3% ($6).
Mance Harmon, CEO and Co-founder of Hedera, said, “There is a big potential to eliminate the middleman and greatly improve the efficiency and cost-effectiveness of this process, therefore delivering the maximum amount of money feasible to those who often want it immediately.”
Since April 2021, Shinhan Bank has been a member of the Hedera Governance Council. Since July 2021, it has also served on Klaytn’s blockchain governance council. Hedera’s native token, HBAR, soared in response to the announcement, gaining 10% in the last 12 hours.
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