A new paper from Citi Institute forecasts the issuance of stablecoins reaching up to $3.7 trillion by 2030 in a bullish scenario that assumes minimal hurdles along the way. It also provided a base prediction of $1.6 trillion, which is less than the $2.4 trillion forecast from the Boston Consulting Group. The Citi numbers are based on several factors such as the proportion of cash that switches to stablecoins both domestically and globally, as well as bank balances and term deposits. Further adoption of blockchain and cryptocurrency will make up the largest proportion of stablecoin balances in all scenarios. While there are potential tailwinds from US and EU stablecoin legislation, the document highlights that more positive factors are required in order to achieve the optimistic case, including favorable legislation in other jurisdictions. The research also explores several potential headwinds. For example, some jurisdictions that fear dollarization could restrict the use of stablecoins. The IMF has regularly written about the challenges of crypto and stablecoin for monetary sovereignty, especially in countries that have exchange controls. On the one hand, if there’s a dramatic shift towards stablecoins, this could negatively impact deposits and the ability of banks to provide affordable lending. However, there are also opportunities for banks. These include obvious ones such as providing on and off ramps, stablecoin cash management services, custody of the reserves, and helping the issuer to buy and sell Treasuries and participate in repo. Banks could even use stablecoin infrastructure themselves. For example, MUFG startup Progmat is exploring using stablecoins instead of Swift for cross border payments, with business users giving them instructions in the normal way. Other banks are already leaning heavily into providing stablecoin services to issuers. BNY Mellon is Circle’s primary bank. Standard Chartered is the bank that has leaned in the most. It has relationships with issuers Paxos and StraitsX in Singapore and is part of a joint venture in Hong Kong to issue a stablecoin. Plus, one of its indirect subsidiaries, Zodia Markets, uses stablecoins for cross border foreign exchange.