[tm-guimaraes]

No. It’s about connectivity.

Payments basics: Simplest scenario (details overly simplified) When you send money from account A on bank X to account B on bank Y, what happens is that Bank X debits account A on its system and credits bank Y’s account on bank X (let’s say it’s Xy account) Then bank X sends message to Bank Y to credit account B, so Bank Y debits X’s bank account (Yx) and credits B.

As you can see this is an issue, it means that every bank has to have an account on every other bank in order to have funds moving around, and even keep liquidity there.

That’s where Clearing And Settlement system comes in, they act as a centralised force.

So instead of bank X having an account (with enough liquidity ) on bank Y so that its customers can transfer money to Bank Y customers, both of these banks have an account on some Clearing/Settlement third party (usually it’s a system by a Central Bank) and interact with that system instead, so instead of N*N bank accounts on outer banks, you have N accounts on central system.

EU has TARGET from ECB for settlement of euros across EU.

But there is no central bank of the whole world of every currency.

So what happens when too far away banks interact?

They have to search through the graph of all the world banks how they can get money to a particular bank. Add currency conversion as an extra complexity, because every connection is on a currency.

So it’s quite the graph search with many constraints, clearing and settling such stuff is hard because of that.

Regulation and AML is just one of the difficulties in linking nodes, but other exists, for example liquidity, a small bank can’t just spread multi currency accounts on many places.

The benefit of stablecoin on a blockchain, is that it kinda gives you “whole world central bank”, more correctly, it makes everybody share the same ledger, instead of each bank having its own that needs reconciliation with everybody else.

The only thing extra needed for stable coins, is space for encrypted messages is a transfer(so that a bank can tell other bank to credit customer B) and a public mapping from Bank Bic to crypto wallet id.

[hiq]

> As you can see this is an issue, it means that every bank has to have an account on every other bank in order to have funds moving around, and even keep liquidity there.

I don't see how a stablecoin solves this. You still need all the actors involved to agree on the stablecoin, just like you'd need them to agree on any non-blockchain-based system. You added an extra step, namely going through this new currency, which presumably is backed 1:1 to an existing one, but that adds some overhead on its own. Every country using USD (or equivalent stablecoin) would remove some friction, but it's not like this will happen.

> EU has TARGET from ECB for settlement of euros across EU. > But there is no central bank of the whole world of every currency.

So how come one exists and not the other yet? And why do you expect the whole world to agree on a stablecoin-based solution if they can't or don't want to agree on a TARGET-like one?

Besides, we usually don't even know how much it'd cost to just use a stablecoin for everything, since there are so few actual legit uses. I'm not sure you'd even end up being competitive with current solutions.

Right now as a consumer (meaning for lower amounts), I can trivially convert between most currencies using wise.com. The fees are not negligible but fine for one-offs, and I can get much lower going through IBKR and I guess others. I'm still to hear of a stablecoin-based solution beating that.

Another hint that the stablecoin solution you describe is not one is that it wouldn't require a public blockchain, since it'd be between actors knowing each other. Quoting https://www.schneier.com/blog/archives/2019/02/blockchain_an...:

> Private blockchains are completely uninteresting. (By this, I mean systems that use the blockchain data structure but don’t have the above three elements.) In general, they have some external limitation on who can interact with the blockchain and its features. These are not anything new; they’re distributed append-only data structures with a list of individuals authorized to add to it. Consensus protocols have been studied in distributed systems for more than 60 years. Append-only data structures have been similarly well covered. They’re blockchains in name only, and—as far as I can tell—the only reason to operate one is to ride on the blockchain hype.

In other words, the solution you seem to describe could have been implemented way before Bitcoin was even invented; the fact that it's not indicates that it's not actually the missing piece.

[bigbadfeline]

> And why do you expect the whole world to agree on a stablecoin-based solution if they can't or don't want to agree on a TARGET-like one?

I didn't read anything about tm-guimaraes "expecting the whole world to agree on a stablecoin-based solution" and you didn't bother to quote him, if he did say it. In fact, multiple stable coins and quick arrangements between individual banks are a big part of the value provided by stable coins.

The point here is that stables do provide a lot of value and convenience for banking, two banks can agree and use a stable in no time at all, they are traded 24x7 on multiple exchanges where every bank has accounts.

I'm not sure what are you trying to argue, the convenience and speed of stables is there for all to see. They have one slight problem, namely they might not be properly regulated and introduce some risks. However, how much can you trust regulations themselves, given that unstable coins, being de facto criminal fraud, are not only legal but perpetrated at the highest level of government.