How banks can profit from digital currencies

A recent webinar hosted by CGI brought together payments and banking leaders to examine how banks can operationalise central bank digital currencies, stablecoins and tokenised deposits and how settlement, liquidity and governance issues change as the US GENIUS Act renews momentum for stablecoins.

Participants included Sean Devaney, vice-president for market strategy — payments at CGI; Naveen Mallela, global head of payments at Standard Chartered; Lewis Sun, global head of digital currencies at HSBC; and moderator Scott Hamilton.

Panel participants mapped distinct infrastructure needs. Central bank digital currencies typically require integration with central bank settlement rails and dedicated central bank accounts. Stablecoins depend on private issuers, custody arrangements and bank connections for on‑ and offboarding. Tokenised deposits are ledger-based representations of bank liabilities that require minting and burning processes and tight links to core banking systems.

The panel outlined different settlement and liquidity models. CBDC settlement can use central bank balances and reduce some counterparty exposure. Stablecoin settlement often relies on commercial bank liquidity and correspondent banking links. Tokenised deposits may clear on permissioned ledgers yet still need traditional bank liquidity pools to meet withdrawals and payments. Participants noted that real‑time payment systems compress settlement windows and increase intraday liquidity requirements, forcing banks to adjust liquidity management and hold more accessible short‑term reserves.

Speakers identified operational and recurring costs beyond initial technology investment. Banks will face expenses for secure custody of cryptographic keys, continuous reconciliation between distributed ledgers and core systems, audit and proof‑of‑reserve procedures, and expanded compliance and reporting. Minting and burning tokens require legal checks, asset verification and defined redemption processes, which create ongoing transaction and staffing costs.

Control and governance issues were discussed. When token issuance, ledger operation or smart contract execution are managed by external parties, banks may lose direct operational control while retaining customer relationships. The panel outlined functions banks are likely to keep, including customer due diligence, onboarding, custody of customer fiat and reserve assets, credit underwriting and regulatory reporting. Ledger maintenance, consensus operations and some token issuance functions may be performed by fintechs, platform operators or other third parties.

Speakers flagged new vendor risk vectors tied to code, cryptographic keys and automated contracts that differ from traditional outsourcing arrangements. They said cross‑border activity is complicated by diverging national rules on stablecoins, data residency and reserve requirements, which raise legal and compliance overhead for banks active in multiple jurisdictions.

The panel recommended staged approaches for market entry, such as limiting initial offerings to clearly regulated jurisdictions or using permissioned networks that meet local supervisory requirements. They identified commercial opportunities for banks to offer custody and token custody services, act as liquidity providers for tokenised instruments, provide settlement and reconciliation platforms, and develop programmable payment products that link tokens with credit and cash management services.

To manage risk, the panel advised conducting pilots, setting clear governance frameworks, maintaining strict vendor oversight and engaging closely with regulators as rules develop.