Stablecoins Fill the Gap as Correspondent Banking Retreats

Correspondent banking has been retreating for years, and its decline is having a significant impact on businesses trading between emerging markets and Europe. According to the Bank for International Settlements, the global average cost of sending $200 in remittances was $12, or 6%, in 2024. This is only a three percentage points improvement across two decades, which is slow progress.

The mechanism behind this stagnation is correspondent banking, a network of bilateral relationships through which banks settle payments in currencies and jurisdictions where they have no direct presence. It works but is slow, opaque, and increasingly reluctant to serve difficult markets. As banks withdraw, the corridors they leave behind become more concentrated, more expensive, and more fragile.

However, two things have changed at once: demand for alternative solutions has increased, and regulatory frameworks are emerging that support institutional adoption of blockchain-based settlement. The European Union's Markets in Crypto-Assets regulation and dedicated stablecoin legislation in the United States have provided clarity and certainty, making it possible to build efficient infrastructure.

FinchTrade is a Swiss-regulated OTC desk and crypto-fiat liquidity provider that sits at the center of this new model. Its institutional liquidity desk supplies the liquidity layer, which is then used for cross-border payments through its FinchRails product. This approach has reduced costs and increased speed in corridors such as Africa-Europe.