Are Stablecoins Efficient for Remittances? Evidence from a Mystery Shopping Exercise by Banca d’Italia (European Central Bank)

Summary

• The authors execute mystery shopping cross-border transfers of 200 USDC across ten bilateral corridors between Italy and five partner jurisdictions to evaluate cost and speed.p.4
• Stablecoins show no systematic cost advantage, as total transfer costs range from 0.30% to nearly 9% of the transferred amount.p.4
• The global stablecoin market is valued at approximately $325 billion, with USD-denominated tokens representing about 98% of the total capitalization.p.13
• Compared to the World Bank RPW averages, stablecoin transfers are cheaper in Brazil (2.21% vs 9.96%) and South Africa (5.44% vs 15.23%), but more expensive in the UAE (8.95% vs 2.65%).p.20
• End-to-end execution speed is primarily dictated by domestic payment infrastructures, concluding under 20 minutes with instant payment systems or taking 1 to 2 business days via standard bank transfers.p.4

Key insights

1. On- and off-ramp fiat conversions represent the primary source of total cost and transfer duration in stablecoin remittances.p.4
2. Regulatory fragmentation across jurisdictions directly shapes market structure, service provider availability, and bank integration.p.10
3. Prohibitionist regulatory regimes fail to eliminate demand and instead push stablecoin transactions into un-hosted wallets and unregulated offshore platforms.p.12
4. In Japan, strict asset segregation and barriers to foreign stablecoins caused its share of global yen fiat-to-crypto volume to drop from nearly 60% to around 4% in 2024.p.10
5. Domestic instant payment systems like Brazil's PIX allow zero-cost and real-time bank transfers for fiat-to-crypto gateways.p.12
6. The apparent negative transfer cost (-2.64%) in the Sale phase of the Italy-to-Argentina corridor stems from distortions between official and crypto market exchange rates.p.19
7. Stablecoin execution speed advantages are eliminated in corridors like South Africa that rely on traditional bank transfers for funding and withdrawal.p.22
8. Using credit cards for exchange funding introduced a 3.8% fee, driving the total cost of the UAE-to-Italy corridor to nearly 9%.p.20