There is a new cross-border payment method that utilises both CBDCs (Central Bank Digital Currencies) and regulated stablecoins. This approach facilitates instant settlements and significantly lower costs compared to traditional correspondent banking networks that operate on the SWIFT platform.
CBDCs and stablecoins alone cannot substitute SWIFT, but a hybrid method involving both can be extremely effective. For example, stablecoin transactions already account for a significant share of the United States-Mexico route, while CBDC pilots, such as mBridge, demonstrate the ability to bypass SWIFT entirely for wholesale flows. However, SWIFT is not going to be entirely substituted anytime soon, as it has upgraded its infrastructure and is currently experimenting with CBDC interoperability.
More than $150 trillion of cross-border payments happen every year globally, and most of them go through SWIFT. USDT, USDC, and other stablecoins also move billions in remittances from the US and Mexico at a transaction fee of 1%. If people were to use a traditional method, they would have to pay 7%.
CBDC experiments such as mBridge, meanwhile, have demonstrated real value in cross-border settlements within seconds at a much lower cost than existing traditional banking chains.
And who benefits from all this? It’s the fintech platforms, merchants, and some central banks that use CBDCs to assert control over digital money.
And who loses? Mostly the layers of correspondent banks and, to a lesser degree, SWIFT itself, as it’s no longer an indispensable hub for every cross-border transfer. But for a little while at least, there is going to be some mutual coexistence between CBDCs, stablecoins, and the upgraded SWIFT infrastructure.
How SWIFT banking works
Correspondent banking remains the dominant force in the modern world, operating through a daisy chain of relationships where smaller banks maintain accounts with larger institutions to access foreign currencies and jurisdictions.
Within this system, every transfer must pass through multiple intermediary banks before reaching the beneficiary institution. This multi-step process introduces significant inefficiencies, as each hop adds foreign exchange spreads, necessitates repetitive compliance checks, and creates operational friction.
Operating above this complex network is SWIFT, a secure messaging layer that provides the standardised language for cross-border settlement by instructing banks on which accounts to debit and credit. While SWIFT itself does not move money, its messaging protocols are essential for coordination.
To address systemic delays, SWIFT introduced Global Payments Innovation (GPI), which has significantly improved transparency and speed. Currently, nearly half of GPI payments are completed within 30 minutes, and the vast majority are finalised within 24 hours.
Despite these technological advancements, the system is still constrained by its reliance on legacy infrastructure. Underlying components such as Real-Time Gross Settlement (RTGS) systems and Nostro/Vostro ledgers do not operate on a 24/7 basis. Consequently, they are unable to provide the true atomic, on-chain settlements that modern financial technology aims to achieve.
The architecture is pretty good for large-value bank-to-bank transfers in major currencies. However, in retail remittances and emerging market trade, it is very slow, opaque, and expensive. Total costs in some corridors run above the UN Sustainable Development Goal of 3% per transaction. CBDCs and stablecoins cure these woes.
USA-Mexico remittance corridor
Latin America is a pioneer in crypto adoption, with four of the top 20 countries in the global index. They lean heavily towards stablecoins, which are sometimes used as a de facto digital dollar.
Mexico received around $64.7 billion in remittances in 2024, mostly coming from workers in the United States. Historically, that money came through money transfer operators using SWIFT-enabled correspondent networks. However, in the past few years, crypto-native platforms have built an alternative stack that uses dollar-backed stablecoins for cross-border transfers while integrating with local systems, such as Mexico’s SPEI and Brazil’s instant payment platform, PIX.
There are also exchanges and fintechs, like Bitso and Felix Pago, that route remittances from US senders into stablecoins (such as USDT and USDC). They settle those transfers on public blockchains and then convert them into local currencies on arrival.
It has a tremendous economic impact, with research by Mizuho Bank indicating that when remittances are sent via stablecoins through the USA-Mexico corridor, the transaction fees have fallen well below 1% (as opposed to the 7% that would have been incurred through typical channels).
Bitso processed around $6.5 billion in crypto in 2024 as remittances from the US to Mexico, which is about 10% of the entire corridor. They offer same-day settlements and competitive FX.
Felix Pago, a messaging-based service, reportedly handled more than $1 billion in flow via a USDC SPEI model that uses WhatsApp as the front end, charging materially less than incumbents like Western Union.
It still touches the banking system on and off, and funds do end up in local banks or wallets. However, the role of SWIFT is marginal.
The cross-border value transfer happens on blockchain rails using stablecoins, not via chained correspondent accounts. If it’s a low-value transaction, as there are millions of them, it can effectively go around SWIFT entirely.
Why use Stablecoins?
Stablecoins have a tremendous advantage over legacy rails because they are available 24/7 globally and offer low marginal costs with significant programmability and flexibility. Cross-border stablecoin transfers are confirmed in seconds or minutes and settle for fees measured in cents or less, independent of geography. Because of this, low-value transactions become feasible through stablecoins, unlike the uneconomical nature of traditional correspondent networks.
In South America, stablecoins are not just for remittances but also for trade settlements and corporate treasury. Institutions in Latin America have the highest stablecoin blockchain adoption rates globally.
In a 2025 survey by Fireblocks, it was found that 71% of Latin American institutions were using stablecoins for cross-border payments. Additionally, a separate EY study reported that 80% of non-users were actively exploring adoption.
Brazil’s BTG Pactual launched its own dollar-backed stablecoin, and regional neobank Nubank has embedded USDC as a core product, with about one in four new crypto customers reportedly choosing it as their first asset.
Stablecoins can simplify receivables from US customers for merchants and SMEs. They can then convert it into local currency.
Platforms like Conduit hit $10 billion in analysed cross-border volume in 2024, with Latin America as a primary market. This illustrates how a single stablecoin-based infrastructure can reach many corridors where traditional banking sees a limited margin.
Stablecoins involve significant trade-offs, primarily due to their uneven regulatory treatment and the necessity for trusted issuers, which prevents them from serving as a universal solution for banking money. Furthermore, regulators in advanced economies, such as Europe, have cautioned that unchecked globally used dollar stablecoins could pose threats to both monetary sovereignty and financial stability. The ongoing regulatory tension is a key driver for central banks to accelerate their own experiments with Central Bank Digital Currencies (CBDCs).
The Mbridge experiment
CBDCs were initially a domestic innovation, but multilateral institutions see the cross-border capability as a strong use case.
The World Bank and BIS have outlined several models, such as multiple CBDC platforms and interlinked national systems, that could directly address the frictions of correspondent banking. This would allow regulated participants to transact using central bank money across borders.
A very noteworthy project is mBridge, a multi-CBDC platform by the BIS Innovation Hub in Hong Kong, along with the central banks of Hong Kong, Thailand, China, and the UAE. It is built on a distributed ledger and enables participating banks to hold and transact in multiple wholesale CBDCs on a shared infrastructure, supporting both simple payments and FX payment-versus-payment (PvP) transactions.
In a 2022 pilot programme, the mBridge project successfully settled cross-border transactions for corporate clients using CBDCs issued by four participating central banks. The platform saw over $20 million US dollar equivalent CBDC issued and facilitated approximately 164 cross-border payments and FX PvP deals, totalling more than $22 million, with settlements completed in seconds.
Since that pilot, mBridge has progressed to live cross-border transactions between Chinese banks and their overseas counterparts, reportedly achieving settlements at roughly half the cost of traditional methods. By operating as a multi-CBDC platform where messaging and value transfer occur on the same ledger under central bank governance, the system can, in principle, allow participating institutions to bypass SWIFT entirely.
Looking forward, the primary challenge is scaling the project beyond this limited group of central banks. To achieve broader adoption, the initiative must successfully integrate with existing foreign exchange markets and legal frameworks while ensuring all participants align on shared technical standards.
SWIFT fights back
SWIFT remains one of the West’s primary economic tools for sanctions and embargoes, yet it faces challenges in staying relevant. To maintain its central role, the network has integrated prospective CBDCs and tokenised assets into its infrastructure.
By conducting multiple proof-of-concept trials that link domestic CBDC systems, SWIFT is positioning itself as an essential interoperability layer rather than being displaced by digital currencies. During the 2022 Sibos conference, SWIFT and its partners demonstrated cross-border transactions utilising local CBDCs, RTGS systems, and the SWIFT gpi network. These advancements suggest that CBDCs can be effectively integrated into existing frameworks, removing the need to replace SWIFT entirely.
SWIFT analysts realise that permissionless blockchains and stablecoins are challenging its hegemony. But they stress the advantage of existing KYC, AML, and sanctions screening frameworks, which are built into correspondent banking. They argue that a full replacement by a single global stablecoin or CBDC would create concentrations of power and regulatory blind spots.
Sellers, regulators and consumers
Payment gateways, exchanges, and infrastructure providers are pioneers and winners in this new technological advancement. Global card schemes and processors are also leaning into the new technology, with Visa expanding its stablecoin settlement programme to support multiple dollar-backed tokens. This allows merchants and fintechs to settle in digital dollars while customers are going to pay with cards.
B2B platforms are profiting from programmable settlements and reduced counterparty risks. By leveraging smart contracts, these platforms can now automate escrow conditional payouts and trade finance workflows, which significantly cut both time and working capital needs in cross-border commerce.
Central banks are advancing wholesale CBDCs and stablecoin regulations, notably in Brazil (Resolutions 519/521) and the US (Genius Act), to formalise reserves and licensing. While projects like M-Bridge bolster monetary sovereignty, stablecoins benefit merchants and consumers through lower FX costs and faster remittances. However, the rise of digital dollarisation via stablecoins has prompted policymakers to design CBDCs that balance efficiency with controls on non-resident use.
Merchants and MSMEs benefit from lower FX costs, vast liquidity, and more flexible currency options. Consumers, especially migrants and households in inflation-prone economies, gain access to digital dollars and near-instant remittances through smartphone apps without having a traditional bank account. This accessibility widens the market, but it is a reason for worry for policymakers. They believe digital dollarisation via stablecoins is pushing CBDC designs that balance efficiency with controls on non-resident use.
The biggest losers are the traditional banks and correspondent networks, because they used to get a cut of every transaction that happens while money is moving cross-border. Sometimes a single payment can involve six financial institutions, each of which would take a cut.
But this new technology has negated the need for middlemen. Banks that embrace stablecoins and CBDCs (by issuing bank-backed tokens or participating in mCBDC platforms) may still be relevant in 2026 and beyond.
Is SWIFT losing control?
CBDCs and stablecoins are weakening the de facto monopoly over cross-border value movement, especially regarding consumer remittances and certain emerging market corridors. The US-Mexico corridor shows a critical mass of users and compliant on-off ramp access, with billions of dollars flowing annually with minimal reliance on correspondent banking.
However, the existing infrastructure, regulatory conservatism, and the complexity of large-value institutional payments all work in SWIFT’s favour. Its upgraded GPI services already offer real-time tracking and faster crediting for many bank-to-bank workflows. And CBDC experiments could be deeply into the next generation of digital money systems.
The reality of the coming decades may see a fragmentation instead of a complete usurpation. Some corridors will see remittances go through digital-native flows and trade with crypto-savvy counterparties, where stablecoins and eventual cross-border CBDC platforms will capture a growing share of volume, sidelining SWIFT.
For business leaders, the strategic question is not whether CBDCs and stablecoins will matter for cross-border payments, but where in their own payment flows alternate rails can create immediate economic advantage. In that sense, SWIFT is no longer the only game in town; however, it is not out of the game yet.