Why would a traditional financial player be interested in issuing a stablecoin?

Increasingly popular and accessible, and expected to continue growing in popularity, crypto-assets have been available to buy for almost two decades. Nevertheless, the number of traditional players interested in a piece of the cake by developing their own crypto-assets or by allowing for the trading of crypto-assets on their platforms have remained limited. This approach to crypto might however be coming to an end, with two of the largest European banks publishing statements that they are entering the market by issuing stablecoins. But then what could be the reasoning behind this decision?

In this ECRI explainer, we try to understand the rationale behind traditional financial players expanding their activities into the field of crypto-assets. We discuss the case of PayPal, Société Générale and DWS who are developing their own stablecoin which they will make available to their customers.

Fredrik Andersson is Researcher at ECRI and CEPS. Judith Arnal is Senior Research Fellow at ECRI and CEPS.