This document discusses IBM's Blockchain World Wire, a global payments network and asset registry built on blockchain technology. It allows for fast, low-cost cross-border payments using digital assets like stablecoins. Stablecoins are cryptocurrencies backed by real-world assets like the US dollar to maintain price stability. The World Wire expands the business value for participants by offering different settlement options using digital assets to address diverse payment needs. This attracts more clients and opportunities around lending, custody, and other adjacent businesses for participants in the network.

1. © 2018 IBM Corporation
World Wire Business Update
The new normal in global payments
Business Considerations
Nitin Gaur
IBM Blockchain Labs, Director

2. 2
IBM
Blockchain
Experts
Collaborate with
comprehensive
services teams from
ideation all the way
to production
Solutions
Solve critical industry
challenges by
building and
joining new
business networks
As a founding and
premier member of
Hyperledger, we’re
committed to open
source, standards and
governance
Platform
Develop, govern and
operate enterprise
blockchain networks
with speed and
security
Research
The largest source
of industry insights
from the most
renowned research
team in the world
Delivery
Global service
delivery capability
anywhere and
everywhere you
need it
IBM Blockchain World Wire
Global payments. Simplified.
2

3. 3
How do we
define it? “ Stable Coin is a digital asset that is
collateralized by a price stable asset
(such as Euro, USD), issued,
collateralized and guaranteed by a
regulated Financial Institution, for
purposes of transaction processing
and settlement on a blockchain
powered business network.

4. 4
Solution overview
World Wire
Global Payment Network & Asset Registry
Originating
Financial
Institution (OFI)
Originator Recipient
$ €
• Stable Coins (Fiat Backed)
• Lumens (XLM)
• Bitcoin (BTC)
• Ether (ETH)
D
Receiving
Financial
Institution (RFI)
D
• CBDCs (Central Banks)
• Tokenized Metals (Gold)
• Digital SDRs (Fiat basket)
Supported Digital Assets:
D
1
2
3
Payment Service Provider (PISP, Corporate, MTO or Bank)
Market Maker (MTO or Bank)
Digital Asset or Stable Coin Issuer / Liquidity Provider
(Bank, Central Bank, MTO, or Fintech)
Stellar Protocol
Future Digital Assets:
EXCHANGE(S) EXCHANGE(S)
We are creating a new global financial rail and real-time FX platform

5. 55
Stable Coin in Context
of IBM Blockchain World Wire
IBM Blockchain World Wire
Nitin Gaur
ngaur@us.ibm.com

6. 6
Stable Coin in
Context of
IBM
Blockchain
World Wire
“ A Stable Coin in the IBM Blockchain World
Wire expands the business value to a
network by providing varying degrees of
settlement options to address business
needs to participants in a network. By
providing a choice framework, the IBM
Blockchain World Wire becomes an
attractive payment network for diverse
streams of business with diverse sets of
payment requirements.

7. 7
Stable Coin business consideration
New client acquisition and
opportunity and business
impact
• Cost of new clients
• Additional transactions
• New business opportunities
Tangible Business Value
Custody business impact – custody
opportunity, liquidity impact,
models around enhanced
custody, collateral
management, etc.
• State of custody business
• New cash management models
• Enhanced custody
• Cash collateral management
Custody
Business &
Partnership
Network
Lending business impact –
lending opportunity and new
markets – direct and indirect
• New lending relationships
• New partnership
• Impact on lending business
Lending
Business &
Partnership
Network
Add-on business with focus
on business optimization
including new flows,
partnerships, models
and improved liquidity
• Crypto exchange
• Cross network issuance &
acceptance
• Liquidity optimization
• Liquidity pooling
• Business optimization svc.
Adjunct
Business
Opportunity
& Business
Potential
Stable Coin
Client
Acquisition &
Partnership
Network
Access to new
clients and
business
partners
Access to
new oppty
lending
Growth in
custody
business and
new oppty
Advanced
business
oppty
potential

8. 8
World Wire Stable Coin – Economic moats
Cost advantage
Focus on economies
of scale
Cost advantages derives from volume and value of
transactions.
Intangible value
Business potential and
network access
New derived value due to access to network, business
participants and new corridors. Adjunct business opportunity
and business potential. Early market advantage.
Efficient scale
Leveraging new business models around lending, custody
and collateral management at managed scale.
Efficient economic
structure
Providing sufficient economic value and incentive structure
(during issues or redemption) to attract and incentivize the
business participants.
Network effect
Exponential value of the network increases for both new and
existing users as more diverse entities join the network.

9. 9
World Wire Stable Coin
Cost structure specifics
Cost of Transactions –
Value and Volume
• Resource costs
• Transfer costs
• Direct costs ( PSP)
• Indirect costs (PIP)
• Activity Based costs (ABC)
Examples …
ACH:
Initiating and Receiving ACH
transactions:
• Reported median total cost range
• External cost range of $0.26—$0.50
• Internal cost range of $0.11—$0.25
• Best estimated median cost
• External cost of $0.27
• Internal cost of $0.29
Wire:
Reported range of
median cost
• External cost range of $7.51—$10.00
• Internal cost range of $5.01—$7.50
• Best estimated median cost
• External cost of $8.00
• Internal cost of $6.42
Source: Bottomline

10. 10
World Wire Stable Coin
Impact on liquidity and collateral
Real-time clearing and settlement mechanisms will have a fundamental impact on liquidity and collateral management
Banks, regulators and infrastructure providers need to prepare for this in their risk and liquidity modelling and forecasting
Diverse industry participant needs and lack of common standards around payment and liquidity management.
Interest and perceived value for corporate treasurers is on the
• predictability and
• traceability of incoming and outgoing payments
Better predictability and traceability will enable treasurers to
• position liquidity far more precisely and
• reduce liquidity buffers
Focus on ability to meet financial obligations precisely without liquidity spikes or the need for large buffers
Re-thinking real-time settlement on faster cross-border payments will have an impact on
• liquidity – by enabling treasurers to shrink their working capital buffer
• reduce borrowing requirements and
• access new investment opportunities
Source: Deutsche Bank & SWIFT GPI

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Factors driving real-time treasury challenges
Factors driving the real-time treasury
Faster cross-border payments
SWIFT gpi now has 280 banks signed up, facilitating
over US $100bn in daily transactions. More than 50%
of these are settled within 30 minutes
Extended RTGS and ACH clearing hours
Clearing and settlement hours are extending to increase
convenience for users, such as UK CHAPS, while new
schemes such as HVPS anticipate longer or 24/7 processing
Open banking
Increase in use of open APIs prompted in part by PSD2 and
similar Open Banking initiatives globally (such as in Hong
Kong and Australia)
BCBS 248 intraday reporting requirements
Guidelines and best practices were released in 2017
for all banks
Financial institutions’ real-time
liquidity challenges
Challenges Focus areas
• Lack of standardized
definition of real-time
liquidity
• Lack of consistency
between banks in the
analysis and
management of real-
time liquidity
• Obstacles posed by
legacy technology
infrastructure
• Different conditions
across currencies
• Collaboration,
sharing of expertise
and a single voice to
regulators, e.g.,
through BAFT
• Exploring technology
solutions to analyze
and manage liquidity
• Taking a regional /
global view of
liquidity
Instant payments
40 real-time and instant payment schemes are now
live globally, with 13 planned

12. 12
Stable Coin Impact: Insights on liquidity management
Every bank should be looking at their back office infrastructure to determine what changes they
need to make, not only for transaction processing, but to reflect the real-time impact on risk and liquidity.
This should include an analysis of:
• use of liquidity reporting, e.g.,
• MT900/910
• MT940 (end of day statement messages) or
• periodically using MT942 (intraday statement messages).
• portal technology to understand and manage volatility throughout the day;
• “time criticality” of flows to avoid spikes and outliers in liquidity levels;
• partner banks’ advisory and regulatory experience, and reporting tools, to support local country central bank compliance;
• tools to re-engineer and automate cash flows to manage intraday liquidity and connect in real-time with treasury
departments for position management and cash flow forecasting;
• risk “cockpit” technologies to enable real-time oversight and alerts.
Source: Deutsche Bank & SWIFT GPI

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World Wire Stable Coin
Capital and liquidity structure
Cost of liquidity due to inefficiency
• Endpoint liquidity
• Fixed liquidity
• Cost of prefund amount
• Operational costs
• Liquidity demand with varied prefund cycles
• Ratio of low value to high value transactions
• Liquidity management costs
• Ratio of prefunded and instant
settlement models
Use of DLT to reduce
cost of liquidity due
to inefficiency
• collateral management
for post-trade settlement
• tokenization of liquidity
settlement (Stable Coin)
Stable Coin can also aid in
• real-time liquidity exchange
between banks, and
• opportunity for industry
orchestration such as liquidity
pooling, etc.
• Example – SWIFT project to
improve Nostro reconciliation
and liquidity management

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World Wire Stable Coin – Regulatory considerations
The two most important themes are:
• that users have strong guarantees that their Stable Coins are backed and exchangeable for fiat
• that the issuers will comply with any government requests
Fungibility to Fiat
Ensure that authorized Stable Coins are fully exchangeable for a U.S. dollar (or any other denomination), with conditions to ensure
monitoring and recordkeeping.
Regulatory Risk Control
Implement, monitor and update effective risk-based controls and appropriate BSA/AML and OFAC controls (US) to prevent the Stable Coin
from being used in connection with money laundering or terrorist financing.
Market manipulation and Misconduct
Implement, monitor and update effective risk-based controls to prevent and respond to any potential or actual wrongful use of Stable Coin,
including but not limited to its use in illegal activity, market manipulation, or other similar misconduct.
Transaction Monitoring
Compliance with appropriate transaction monitoring and cybersecurity regulations.
Consumer Protection
Maintain policies and procedures for consumer protection and to promptly address and resolve customer complaints.
Freezing and Forfeiture
Any Stable Coin or fiat currency available upon exchange of Stable Coin that has been subject to freezing, forfeiture to or seizure by a law
enforcement agency, and/or subject to any similar limitation on its use, may be wholly and permanently unrecoverable and unusable and
may, in appropriate circumstances, be destroyed.
Source: https://www.tonysheng.com/gemini-paxos-stablecoins, Gemini, Paxos and Circle Stable Coin legal brief

15. 15
Advantages
Network
Inclusion of Stable Coin as a choice introduced new capability and business
models in a payment network. It provides new settlement option leading to
new business models and synergies between network participants.
Issuers
Creates new business avenues for FIs (Anchors) for not only as credit
issuers but also value add services such as liquidity providers, client
acquisition , and additional value based transaction costs.
Consumers
For the consumers of Stable Coin the network participants can enjoy
instant settlement, access to capital, reduced credit risk and working
capital – all for incremental fees.
New Business
Models
The network will attract new participants and secondary markets
due to co-creation elements of new synergies between participants.

16. 1616
Back-Up
IBM Blockchain World Wire
Nitin Gaur
ngaur@us.ibm.com

17. 17
Solution overview
Novelty = Digital Assets and the Emerging Token Economy IBM Blockchain World Wire*
Settlement Focus
• Transfers must be pre-funded to support
settlement
• Reserves are deposited into a multi-
currency custodian account
• Payment is the recorded movement of
balances between counterparties
• Transactions are atomic and settlement
is instant
Custodial
Clearing Focus
• Funds are made immediately available via
instant credit transfers
• Instant credit transfers are decoupled from
fund movement (settlement)
• There is no pre-funding requirement
• Payment is assured via legal constructs
between counterparties' jurisdictions and bi-
lateral netting agreements between
participants
• Settlement is deferred and asynchronously
performed on a different network
Correspondent
Clearing and Settlement Focus
• Clearing and settlement are performed
on the same network in near real time
• Pre-funding is optional
• Transactions involving swaps of assets
can be atomic and settled instantly by
exchange of digital representations of
those assets
• Digital assets are also used as an
(intermediary) bridge for FX pairs
where direct crosses are not quoted
Digital Asset *
Incumbent: CLS Incumbent: SWIFT + Nostro / Vostro Accounts
• CLSNet • SWIFT • Visa B2B Connect • Ripple• CLS Ledger Connect

18. 18
Network participant roles
1 2 3Payment Service Provider * Market Maker Digital Asset Issuer / Liquidity Provider
Banks + money transfer operators +
money service businesses + non-banks
(corporates) + remittance providers +
retailers, etc. …i.e. any authorized entity
acting as, or on behalf of money senders,
which may be consumers or businesses.
These are the beneficiaries of the World
Wire Network.
* i.e. Payment Initiation Service Providers (PISP)
according to PSD2 definitions = those acting
on behalf of senders (i.e. PSUs = Payment
Service Users according to PSD2 definitions)
Regulated money service businesses,
including banks, non-bank financial
institutions, or any entity authorized by
their regulators to handle money and/or
performexchange functions, converting
fiat currency to/fromdigital assets. This
role is crucial to the function of the
World Wire network, providing endpoints
for deposits and payouts in different
currencies. These are the primary
participants of the World Wire network.
Banks, central banks and financial
services entities who issue digital tokens
representing a claimon real world assets.
This includes especially Stable Coins and
Central Bank Digital Currencies, but also
crypto currencies like BTC, ETH, and XLM.
This is the novelty of World Wire: the
exchange of digital assets is what enables
real time settlement.
World Wire
Global Payment Network & Asset Registry
Originating
Financial
Institution (OFI)
Originator Recipient
$ €
D
Receiving
Financial
Institution (RFI)
DD
Stellar Protocol

19. 19
Client segmentation
• Licensed MTOs
• Long Tail participants
• Faster onboarding of
operational endpoints
• Repeatable
onboarding service
model
• Indirect integration
with banks
• Hosted payment
accounting system
• Real-time (DA) or
Deferred (DO)
Settlement
REGULATED
NON-BANK FI’s BANKS CENTRAL BANKS
CORPORATES
+ OTHER
Build the Network Drive Payment Volume Expand the Network Add Assets & Liquidity Expand Target Users
• Initial participation as
liquidity providers
through issuance of
Stable Coins
• Drive payment volume
through MTO-enabled
channels
• Later stage direct
integration as PSPs
• Liquidity provider
through CBDC
issuance
• Derivative offerings
through RTGS-aaS
• Liquidity subsidization
of large value payment
expansion (corporate
payments)
• Customized
implementations for
specialized clients /
“coopetition” (Visa,
CLS)
• Telcos for “first mile” /
“last mile” in under-
developed regions
• Corporate Treasuries

20. 2020
Stable Coin
IBM Blockchain World Wire
Nitin Gaur
ngaur@us.ibm.com

21. 21
Value add to
Business Participants
Time and Trust
Price Volatility of crypto assets
Clearing and Settlement
Financial risks of
non-collateralized obligations
DvP – Delivery vs. Payment
Realtime settlement
21

22. 22
Early use cases
Liquidity provisioning in IBM Blockchain World Wire (new routes, new
business models)
DvP – Delivery vs. Payment – Blockchain networks
Realtime settlement
Minimize/Eliminate (Digital) Obligation
Liquidity as a Service

23. 2323
Stable Coin in Context
of IBM Blockchain World Wire
IBM Blockchain World Wire
Nitin Gaur
ngaur@us.ibm.com

24. 24
Stable Coin in
Context of
IBM
Blockchain
World Wire
“ A Stable Coin in the IBM Blockchain World
Wire expands the business value to a
network by providing varying degrees of
settlement options to address business
needs to participants in a network. By
providing a choice framework, the IBM
Blockchain World Wire becomes an
attractive payment network for diverse
streams of business with diverse sets of
payment requirements.

25. 25
Advantages
Network
Inclusion of Stable Coin as a choice introduced new capability and business
models in a payment network. It provides new settlement option leading to
new business models and synergies between network participants.
Issuers
Creates new business avenues for FIs (Anchors) for not only as credit
issuers but also value add services such as liquidity providers, client
acquisition , and additional value based transaction costs.
Consumers
For the consumers of Stable Coin the network participants can enjoy
instant settlement, access to capital, reduced credit risk and working
capital – all for incremental fees.
New Business
Models
The network will attract new participants and secondary markets
due to co-creation elements of new synergies between participants.

26. 26
Consideration
Need to evaluate the monetization model for the Anchors, liquidity providers,
and Network operator.
Determine the incentive structure to promote the business value while
adhering to core value of the network.
Determine the global and contextual operating and regulatory landscape of
the participants.
Determine the risk factors such as FX, liquidity, credit and cybersecurity
risks models.

27. 2727
Stable Coin
Business Needs
IBM Blockchain World Wire
Nitin Gaur
ngaur@us.ibm.com

28. 28
Business Model #1:
Stable Coin – Centralized Issuance IoU
Service IBM Blockchain World Wire – Centralized Issuance
Objective
A WW Participant – centralized company holds assets in a bank account or vault and issues tokens that represent a claim on the
underlying assets.
Description
a. The digital token has value because it represents a claim on another asset with some defined value
b. Asset is always a Fiat and one of the current bridge currencies. – USD, Euro, JPY, GBP.
c. Issues by a. regulated financial entity
d. With regulatory oversight and network initiated audit and compliance.
Advantages
a. Well acceptable model
b. Lower volatility and higher trust
c. Least disruptive business model acceptance
d. Avenue for well known players with trust and Brand identity
Disadvantages
a. These tokens require trust in the issuing party– that they actually own the assets being represented and that they are willing to honor
the IOUs
b. Centralized
c. Cost of collateral (cash) – Oppty Costs and collateral costs
d. imposes serious counterparty risk on holders of the token
e. Additional effort to establish solvency and legitimacy.
Industry Example The first is to issue IOUs. This is the model used by tokens like Tether and Digix.
Revenue Model TX costs – flat or QoS based

29. 29
Business Model #2:
Stable Coin – Collateral Backed on Chain
Service IBM Blockchain World Wire – Collateral Backed on Chain
Objective
Many WW Participant – the collateral backing the Stable Coin is itself a decentralized crypto asset issues on the chain. ( Tokenizing the
asset itself)
Description
a. Create Stable Coins that are backed by other trustless Permissioned entity assets on-chain
b. The collateral is held by the network participants governed by ecosystem economic models of transfer and redemption
c. Participants aren’t relying on any third party to redeem it – the token itself it claim on collateral backed
d. This model promotes – the collateral backing the Stable Coin is itself a decentralized crypto asset.
Advantages
a. Widely popular model which bridges the public and private blockchain boundaries.
b. Lower volatility and higher trust
c. Avenue for well known players with trust and Brand identity
d. Avenue for new business models for network participants.
e. The Revenue structure is governed by ecosystem economic models of transfer and redemption
Disadvantages
a. Cost of collateral (cash or crypto assets) – Oppty Costs and collateral costs
b. imposes counterparty risk on holders of the token
c. Additional effort to establish solvency and legitimacy.
d. Issues with collateral backing the Stable Coin is often a volatile crypto asset such as BTS or ETH.
e. Perils of under and over collateralized assets other than fiat.
Industry Example Creation of Stable Coins that are backed by other trustless assets on-chain – BitShares., Maker, Havven, Sweetbridge , Augmint
Revenue Model TX costs – flat or QoS based, exchange costs, collateral and lending models with-in the network, other Overlay services.

30. 30
Business Model #3:
Stable Coin – Seigniorage based models
Service IBM Blockchain World Wire – Seigniorage based models
Objective
A WW Participant –Seigniorage style Stable Coins are an algorithmically governed approach to expanding and contracting a Stable Coin’s
money supply.
Description
a. Some initial allocation of Stable Coin tokens is created. They are pegged to some asset such as USD
b. As total demand for the Stable Coin increases or decreases, the supply automatically changes in response
c. The model mimics central bank – which algorithmically expands and contracts the supply of the price-stable currency
d. Relies on belief system of currency – these Stable Coins are not actually “backed” by anything other than the expectation that they
will retain a certain value
e. In the seigniorage based model – increased demand causes the system to issue new Stable Coins, thus increasing supply, and
ultimately lowering price to the target level. This works conversely, using “bonds” to remove coins from circulation – there by
algorithmically expands and contracts the supply of the price-stable currency
Advantages
a. As the network grows, so too does demand for the Stable Coins
b. New business models and new network instruments – New Opportunity
c. Crypto native assets can be used a transaction currency while reliance on demand-supply based instruments.
Disadvantages
a. Technology risk – increase and decrease the monetary supply in a way that is both decentralized, resilient, and un-gameable
b. Establishing a governance structure that is decentralized and understood models for expanding and contracting the supply of the
price-stable currency
c. Establishes a more complex business structures and regulatory exposure with respect to type of currency and its movement.
d. The seigniorage shares model is at best experimental, and most “crypto-native” approach to creating a trustless decentralized Stable
Coin – creating issues around token fungibility and systemic risk.
Industry Example Some commonly used is the “bonds and shares” method introduced by Basecoin, Fragments, Carbon, Kowala
Revenue Model
New business models, around creation of crypto native and pegged assets, creation of new instruments ( bonds, IOUs) and Seigniorage
shares in the network.

31. 31
Network participant roles
1 2 3Payment Service Provider * Market Maker Digital Asset Issuer / Liquidity Provider
World Wire
Global Payment Network & Asset
Registry
Originating
Financial
Institution (OFI)
Originator Recipient
$ €
D
Receiving
Financial
Institution (RFI)
DD
Stellar Protocol
Banks + money transfer operators +
money service businesses + non-banks
(corporates) + remittance providers +
retailers, etc. …i.e. any authorized entity
acting as, or on behalf of money senders,
which may be consumers or businesses.
These are the beneficiaries of the World
Wire Network.
* i.e. Payment Initiation Service Providers (PISP)
according to PSD2 definitions = those acting
on behalf of senders (i.e. PSUs = Payment
Service Users according to PSD2 definitions)
Regulated money service businesses,
including banks, non-bank financial
institutions, or any entity authorized by
their regulators to handle money and/or
performexchange functions, converting
fiat currency to/fromdigital assets. This
role is crucial to the function of the
World Wire network, providing endpoints
for deposits and payouts in different
currencies. These are the primary
participants of the World Wire network.
Banks, central banks and financial
services entities who issue digital tokens
representing a claimon real world assets.
This includes especially Stable Coins and
Central Bank Digital Currencies, but also
crypto currencies like BTC, ETH, and XLM.
This is the novelty of World Wire: the
exchange of digital assets is what enables
real time settlement.

32. 32