Traditional banking institutions are starting to appreciate the benefits of blockchain systems and are building systems that integrate this tech with legacy transactional rails. The largest Japanese banks—MUFG, SMBC, and Mizuho— seek to ditch correspondent banks, a key figure to complete international payments, for a stablecoin-based system.

The three banks are involved in Project Pax, a cross-border payment platform that allows users to complete international settlements using conventional banking tools, putting the blockchain element behind the curtains. The platform will integrate SWIFT, the standard messaging system for international payments for this task, making users unaware they are using stablecoins for their transactions.

The idea is to accelerate the completion of these payments and offer the possibility of sending them 24/7, taking advantage of the stability and efficiency of stablecoins.

Pax will be based on Progmat, a tokenization network developed by MUFG with the support of Mizuho, SMBC, and other institutions. Progmat is also part of a recently announced joint venture with DMM Group, a Japanese entertainment giant, to mint their licensed stablecoin.

While there are no announced dates for the platform’s launch, the Pax consortium expects to start testing a working prototype with minimum functionality shortly. Banks spearheading this initiative are also looking to associate with other international and national institutions to launch this platform in 2025.

The acceptance and use of stablecoin in Japan have grown exponentially after the approval of a stablecoins law in 2022, that allowed licensed banks to issue their stablecoins pegged to the Japanese yen or another legal tender.

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