Key takeaways
- Major financial institutions plan a shared digital dollar
- Banks want greater control over stablecoin economics
- Tokenized assets need reliable digital cash for settlement
Goldman Sachs, Bank of America, Citi and 18 other financial institutions are preparing to challenge the dominance of existing stablecoins by developing a shared digital dollar.
According to a September 1 announcement published by Wells Fargo, the consortium intends to establish a company in 2026 and launch its first dollar-backed stablecoin during the first half of 2027.
The participants include 18 banks, asset managers Fidelity and WisdomTree, and Sirius International Holding. But why develop a new token when Circle's USDC already provides dollar-denominated blockchain payments?
Why Banks Don't Want to Depend Entirely on USDC
The answer begins with control over customers, payment infrastructure and revenue.
When a company converts ordinary dollars into USDC, the resulting tokens become liabilities of Circle's issuing entity rather than deposits at the customer's original bank.
Circle manages the reserve structure and redemption arrangements, while financial institutions may provide custody, distribution and payment services.
For banks, widespread stablecoin adoption could gradually move customer balances outside conventional deposit accounts.
That concern helps explain why institutions are developing their own digital dollars instead of relying exclusively on external issuers.
There is also a revenue opportunity.
Stablecoin reserves typically contain cash and short-term Treasury instruments that can generate interest income.
Circle's financial disclosures show how important those earnings are, although its distribution agreements require sharing substantial revenue with partners.
A bank-backed consortium could potentially capture more of that economic value.
However, the participants have not disclosed how their proposed token's reserve income, expenses or profits would be distributed.
Why Are 21 Institutions Building One Stablecoin?
A shared token could solve a problem that individual bank-issued stablecoins create: fragmentation.
Imagine a company holding digital dollars issued by Bank A while its supplier accepts only tokens issued by Bank B.
Converting between those tokens could require additional liquidity providers, fees and settlement procedures.
A common stablecoin supported by multiple financial institutions could reduce that friction if participants agree on redemption standards and interoperability.
The consortium plans to target cross-border payments and digital-asset settlement, initially using dollars before potentially expanding into euros and other G7 currencies.
The approach differs from Japan's joint stablecoin initiative, which involves three major banking groups developing a shared issuance structure.
It also contrasts with tokenized bank deposits, where customers hold digital representations of existing commercial-bank liabilities rather than separate stablecoin claims.
The consortium has not yet explained whether its planned token will operate on one blockchain or several.
Can Bank Stablecoins Actually Compete With Circle?
Building a digital dollar is relatively straightforward compared with persuading businesses and financial platforms to use it.
USDC already benefits from established trading liquidity, exchange integrations and payment relationships.
Banks therefore need more than regulatory credibility. They must offer competitive redemption, reliable interoperability and meaningful advantages for corporate clients.
The opportunity is substantial because tokenized securities require digital settlement assets.
Banks could potentially connect blockchain payments directly with their custody and treasury services, reducing the number of intermediaries involved.
Yet independent issuers are responding. Circle has explored privacy-focused USDC products aimed at institutions that require confidential transactions.
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Adrian Cole
Adrian Cole has spent more than 6 years covering financial markets, with a focus on crypto, equities, and macroeconomic trends. He follows Bitcoin, major altcoins, U.S. stocks, interest rates, commodities, and the data points that move markets. Over the years, he has written hundreds of market updates and analysis pieces, with an emphasis on price action, investor sentiment, and the link between traditional finance and digital assets.
https://coinpaper.com/38348/why-21-major-banks-want-to-create-their-own-digital-dollar-instead-of-using-usdc
