Major Banks Explore G7-Backed Digital Currency Initiative

The banking alliance, comprising Banco Santander, Bank of America, Barclays, BNP Paribas, Citi, Deutsche Bank, Goldman Sachs, MUFG Bank Ltd, TD Bank Group, and UBS, announced their collaborative exploration of a “1:1 reserve-backed form of digital money” that would operate on a public blockchain. According to the statement posted by BNP Paribas, the proposed digital token would be pegged to G7 currencies, including the US dollar, euro, and Japanese yen from member nations United States, Canada, France, Germany, Italy, Japan, and the United Kingdom.

The banks emphasized that their objective is “to explore whether a new industry-wide offering could bring the benefits of digital assets and enhance competition across the market, while ensuring full compliance with regulatory requirements and best practice risk management.” This careful wording reflects the institutions’ commitment to working within existing financial frameworks while innovating in the digital currency space. The consortium’s size and global reach—spanning North America, Europe, and Asia—signals a coordinated effort to establish standards for bank-issued digital currencies.

Stablecoins, which are digital tokens backed by non-volatile fiat currencies, have evolved from their original use by cryptocurrency traders for quick transactions involving Bitcoin and other digital assets. The banking consortium’s exploration marks a significant shift toward mainstream financial adoption, joining other major corporations like Meta and Amazon that have expressed interest in issuing their own tokens. This transition from niche crypto tool to mainstream financial instrument represents one of the most notable developments in digital finance.

The growing institutional interest coincides with regulatory developments that provide clearer frameworks for stablecoin operations. In July, U.S. President Donald Trump signed into law the GENIUS Act, establishing comprehensive guidelines for issuing and trading stablecoins. This legislative foundation, combined with the banking consortium’s emphasis on regulatory compliance, indicates that stablecoins are moving from the regulatory periphery to the center of financial innovation discussions.

Analysts at British bank Standard Chartered recently projected that stablecoins could attract approximately $1 trillion in deposits from banks in emerging markets over the next three years. This substantial capital movement underscores the transformative potential of stablecoins in global finance, particularly for international payments where their speed and cost efficiency offer significant advantages over traditional banking systems.

The banking consortium’s focus on G7 currency backing provides stability and trust mechanisms that could accelerate adoption among both institutional and retail users. By leveraging public blockchain technology while maintaining 1:1 reserve backing, the banks aim to combine the benefits of cryptocurrency—such as transparency and efficiency—with the stability of traditional fiat currencies. This hybrid approach could potentially reshape cross-border payments, settlement systems, and digital asset markets while maintaining the regulatory safeguards that characterize traditional banking.