EuroFinance

In several economies where access to hard currency is constrained, money does not move as freely as trade demands. Companies can sell into large consumer markets, but getting paid—and moving that cash across borders—remains full of restrictions, volatility, and policy uncertainty.

“Historically we used to have a lot of issues with cross-border payments,” says Julio Harada, senior finance manager at Dana Incorporated, an American supplier of drivetrain, sealing, and thermal-management technologies, pointing to countries such as Venezuela and Bolivia, where access to dollars or other hard currencies can be restricted. In Argentina, he notes, firms have at times had to resort to parallel markets “in order to get hard currency and to release the payments.”

Stablecoins, in his view, offer a potential workaround—not yet a solution, but “an initial path”. Their appeal lies less in efficiency and more in necessity. “We cannot be out of those countries,” he explains. “So we need to find a way in order to sell… and also we need to collect the cash.” For treasurers dealing with constrained currency environments, digital instruments pegged to currencies such as the dollar could provide a channel where traditional banking systems fall short.

Yet the promise remains mostly theoretical. Harada recounts exploring stablecoin transactions with a customer in Bolivia, where currency restrictions made conventional settlement difficult. Despite finding a bank able to facilitate such transactions, the effort stalled. “In the end we found another way, so we didn’t pursue the stablecoins,” he says, highlighting both the early stage of the ecosystem and the practical hurdles involved.

Those hurdles are not just technical. Corporate conservatism plays a role. “It’s uncommon, or they are not so flexible, to perform different transactions that are just starting. They have defined instruments in their financial policies.” In such settings, experimenting with new financial instruments must deal with internal controls as much as external constraints.

Where stablecoins may find firmer footing, Harada suggests, is in addressing outbound flows rather than internal funding. “Most of the issues that we have in the region is to take the money out, not to put the money in,” he says. As such, their most practical application today lies in facilitating payments abroad or easing the movement of funds out of constrained markets, rather than in intercompany financing structures.

Regulation will determine whether this use case expands. Harada expects adoption to mirror earlier developments in cryptocurrencies. “At the beginning [there were] a lot of restrictions… now it’s regulated… and this market increased a lot,” he says. Stablecoins, he argues, may follow a similar trajectory, particularly because they are “better… correlated with an asset like a dollar or euro.”

Even so, stricter oversight may accompany wider use. Know-your-customer (KYC) requirements from banks, already stringent, could become stricter. “When dealing with local currency to buy stablecoins, the main concern for banks is whether they know the source of this local cash,” he notes.

There is also the risk of policy reaction. Governments seeking to attract hard currency inflows may view stablecoins with suspicion if they enable capital to bypass domestic systems. “I would not be surprised to have regulations where stablecoins is not allowed,” Harada says, especially if they undermine official efforts to stabilise currencies or control capital flows.

Trust remains uncertain, especially in volatile markets. Harada distinguishes between privately issued tokens and those backed by established financial institutions. “I would prefer a bank stablecoin to a private one,” he says, adding that in countries with currency restrictions, confidence is paramount.

For stablecoins to move beyond experimentation, scale and credibility will be decisive. At present, Harada sees limited participation from major global banks. “I don’t see a lot of banks… performing this type of transaction in the region,” he says. The entry of large institutions could change that. “It would be great to have major global banks performing this type of transaction,” he notes, arguing that such involvement would make it “easy to explain” and easier to secure internal approval.

Until then, stablecoins remain on the horizon rather than in the toolkit. “It’s still on the radar,” Harada says. But in markets such as Venezuela, Bolivia and Argentina—where financial constraints are structural rather than cyclical—even tentative solutions command attention.

Julio Harada, senior finance manager at Dana Incorporated in Brazil, will be speaking at the EuroFinance’s 30th International Treasury & Cash Management Summit Miami in May.  He will speak in the session “Cross border payments: stablecoins and their use cases in the region”.