Rizal Commercial Banking Corp. (RCBC) bared plans on Thursday to issue currency-backed “stablecoins,” hoping the new technology in banking will provide a better and faster remittance platform for overseas Filipino workers (OFW).
Stablecoins are considered new virtual currencies that carry a fixed value, and are deemed less volatile than Bitcoins as these are pegged to an asset like a currency or exchange traded commodities.
“RCBC is pleased to be an early innovator with our intent to issue our own peso stablecoin on World Wire, pending final approval from our regulators,” RCBC Group Head of Global Transaction Banking Emmanuel Narciso said.
If RCBC’s plan come to fruition, the bank will be one of six around the world that had expressed intentions to issue stablecoins on IBM‘s World Wire—a platform that has the capacity to simultaneously clear and settle cross-border transactions to almost real-time efficiency.
“Both these attributes will render international remittance transactions faster and easier for RCBC’s clients and partners beyond Philippine borders, and will greatly benefit Filipinos working overseas,” the bank said.
How does it work?
With stablecoins, OFWs can buy coins using their dollars or any foreign currency on hand and send it to their loved ones in the Philippines for redemption.
“If an OFW buys $1,000 worth of Philippine peso stablecoins and the coins are priced at P50 per coin, the OFW gets 20 coins. He can send these coins to the Philippines, and his loved ones can redeem the coins in peso value which is P50,000,” Narciso explained.
RCBC said this platform is expected to reduce the cost of sending money from abroad via a more secure channel.
When sending money from abroad, Filipino migrant workers are usually charged between 2 percent and 7 percent for every $200 sent home, the bank said. RCBC further noted that at times, foreign currencies sent from abroad are also affected by the foreign exchange difference in the country as against the local currency’s value in the international market.
“This ultimately results in a lower value remitted to OFW beneficiaries,” Narciso said. “While the amounts may seem small, when converted to local currency the charges do hurt their pockets,” Narciso added.
World Wire is present in 72 countries and exchanges 48 currencies in partnership with 46 banking channels which includes banks and remittance companies.