Definition ∞ Bank stablecoin issuance refers to the process where traditional financial institutions, such as commercial banks, mint and distribute stablecoins. These stablecoins are typically backed by fiat currency held in reserve accounts at the issuing bank, aiming to combine the stability of conventional money with the efficiency of blockchain technology. This approach contrasts with stablecoins issued by non-bank entities, providing a potentially more regulated and secure alternative. Such issuance can facilitate faster, cheaper interbank settlements and cross-border payments.
Context ∞ The prospect of banks issuing stablecoins is a significant development in the convergence of traditional finance and digital assets, often appearing in financial news. Central banks and regulators are actively exploring frameworks to permit and supervise such activities, considering both the benefits for payment systems and potential systemic risks. Key discussions center on the regulatory perimeter, interoperability with existing financial infrastructure, and consumer protection measures.
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