For all the attention given to innovation in payments, one of the most important business problems remains stubbornly familiar. Companies still need to move money across borders, outside domestic banking hours, across time zones and between different currencies. These transactions continue to carry cost, delay and uncertainty, particularly when several institutions or less frequently traded currencies are involved. Correspondent banking has long provided the infrastructure behind this movement of money. A payment may pass through several institutions before reaching its destination, with each managing the foreign exchange between the currency it receives and the one it passes on, each ensuring sufficient liquidity is available and carrying out compliance checks on all the counterparties involved. The model has supported global commerce for decades, but this repeated coordination across multiple institutions has also created persistent friction. Stablecoins are now beginning to challenge some of the assumptions behind that system. Their relevance lies increasingly in what they could mean for the infrastructure of cross-border payments. Correspondent banking may become less visible as a result, but the functions it performs will not disappear. Liquidity provision, foreign exchange, compliance and settlement will still be required. The question is whether they remain bundled within chains of banking relationships or are increasingly delivered through programmable digital infrastructure. Stablecoins Are Becoming a Payments Infrastructure Question The stablecoin market remains overwhelmingly dominated by currencies linked to the US dollar. Yet signs of a broader market are beginning to emerge. Financial institutions and technology companies are exploring or issuing stablecoins denominated in euros, pounds and other local currencies, while regulators are developing frameworks for their use. This does not mean local-currency stablecoins are already transforming global commerce at scale. But it does raise an important question about how cross-border payments could evolve if businesses were able to hold and move digital value in a wider range of currencies. A company trading internationally might one day receive a locally denominated stablecoin, hold that value outside conventional banking hours and transfer it without waiting for domestic payment systems to reopen. For businesses operating across several markets, that could create greater flexibility around settlement and treasury management, while reducing the need to carry exposure to another currency. But the apparent simplicity ends when the recipient needs to be paid in a different currency. More Currencies Do Not Automatically Mean Simpler Payments Moving a digital dollar from one wallet to another is relatively straightforward. Moving from a digital pound into a digital euro, or from another local-currency stablecoin into a dollar-denominated one, introduces many of the same questions that exist in cross-border payments today. There still needs to be a reliable price and sufficient liquidity. The transaction has to settle with certainty, and the institutions involved need confidence that the appropriate compliance checks have taken place. Consider a UK business that receives payment in a sterling-denominated stablecoin but needs to pay a supplier in euros. Unless there is sufficient compliant GBP–EUR liquidity available at that moment, someone still has to provide the conversion, manage the settlement risk and ensure both parties have been appropriately screened. In other words, the market still needs a trusted way to move between currencies rather than merely within them. This is where the correspondent banking question becomes more important. The existing system does much more than send payment instructions. It provides access to currencies, liquidity, regulated counterparties and mechanisms for coordinating settlement across different jurisdictions. Any new infrastructure seeking to improve on that model will still have to perform those underlying functions. Stablecoins do not eliminate the need for this infrastructure. They create an opportunity to unbundle it and deliver it differently. The Risk of Recreating Old Frictions in Digital Form A world with more local-currency stablecoins could bring meaningful advantages, particularly around availability and settlement speed. But fragmentation remains a risk. Without an efficient way to exchange one stablecoin for another, businesses and financial institutions may need to hold liquidity across multiple currencies, platforms and markets. Treasury teams could find themselves pre-positioning funds to ensure transactions can complete when needed. Foreign exchange exposure would remain, and intermediaries may still be necessary where direct liquidity between currencies is limited. The technology would be different, but some familiar problems could persist: trapped liquidity, operational complexity and uncertainty around settlement. Compliance adds another layer. Financial institutions still need to understand who is sending and receiving value, whether sanctions or other restrictions apply, and whether activity presents a financial crime risk. These requirements do not disappear because settlement takes place on blockchain infrastructure. For stablecoin exchange to support institutional payments at meaningful scale, these controls will need to operate alongside the movement of value, rather than as a separate process after settlement. The infrastructure will therefore need to do more than connect wallets or blockchains. It may need to aggregate liquidity across different venues, route transactions according to price and availability, screen participants and transactions, and coordinate the exchange of both currencies so that settlement occurs simultaneously or as close to simultaneously as possible. Without those capabilities, the market risks replacing chains of correspondent banks with chains of wallets, exchanges and liquidity providers, while preserving many of the same underlying inefficiencies. Rebuilding the Functions of Correspondent Banking Stablecoins may become an important part of the future of cross-border payments, but issuing more of them is only one part of the equation. The next challenge is to make those currencies exchangeable without recreating the complexity the technology is meant to reduce. That requires liquidity, pricing, settlement certainty and compliance to work as part of a coherent process rather than as separate layers. The likely result is not the disappearance of correspondent banking, but the gradual redesign of its core functions. Currency exchange, liquidity provision and compliance could increasingly be coordinated through automated infrastructure rather than long chains of bilateral banking relationships. That infrastructure could use programmable routing to identify the most efficient path between currencies, draw liquidity from multiple markets and reduce the need for institutions to pre-fund accounts across every jurisdiction in which they operate. Atomic or near-simultaneous settlement could also reduce the risk that one side of a currency exchange completes while the other does not. This does not remove the need for trusted institutions. Banks and regulated financial firms may continue to provide liquidity, custody, market access and compliance oversight. Their role may shift, however, from passing payments sequentially through a chain to providing services into a more connected exchange layer. Entering the Next Stage The next stage of stablecoin infrastructure will therefore depend less on how many currencies can be tokenised and more on whether those currencies can work together safely. Until that problem is solved, there is a risk that the market simply rebuilds familiar cross-border inefficiencies in a new format. If it is solved, stablecoins could do more than make individual currencies digital. They could move the functions of correspondent banking away from fragmented chains of intermediaries and into a more automated, interoperable and programmable system for exchanging value between currencies. For more information about Block Infrastructure, please visit: https://www.block-infrastructure.com/ No#StablecoinsRichard BeverleyCEO and Co-founder Block Infrastructure03 Aug, 2026