French multinational bank, Societe Generale, has launched its own Euro-pegged stablecoin named “EURon” on the Ethereum blockchain. The news briefly caused the Societe Generale stock price to jump before dropping below yesterday’s close price.
The stablecoin is the first to be issued by the bank, which is one of the leading investment banks in France.
How will the Societe Generale EURon work?
The EURon is pegged to the Euro at a 1:1 ratio; meaning the value of one EURon will be equal to that of one Euro. In addition, every time a new EURon stablecoin is minted (created) an equivalent amount of Euro will be placed in a ring-fenced account to back the stablecoin up.
The Euro reserves will ensure that the stablecoin maintains its Euro-peg.
The stablecoin will run on Ethereum, the Ethereum blockchain smart contracts ensure that the stablecoin is stable and secure.
Societe Generale plans to use EURon to facilitate cross-border transactions, allowing customers to quickly and efficiently transfer Euros across borders. In addition, the bank also plans on leveraging the blockchain technology underlying EURon to improve the efficiency of its normal financial services.
The growing stablecoins’ popularity
Stablecoins have become increasingly popular in the crypto space because of their price stability, which is maintained by being pegged to an underlying asset, such as gold or the US dollar. They have become prevalent alternatives to traditional cryptocurrencies, which are known for their high price volatility.
With EURon’s launch, Societe Generale has joined the growing list of financial institutions that have embraced stablecoins for faster and more efficient cross-border payments.
In addition, Societe Generale’s launch of a stablecoin marks an important step towards the adoption of blockchain technology by traditional financial institutions. It is likely that we will see more institutions embrace the power of blockchain technology as they continue to recognize the benefits that the technology offers.
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