Exploring the FX implications of digital money for corporate treasurers

Digital money is often presented as a way of making cross-border payments faster and more efficient. Why will the growth of stablecoins, tokenized deposits and other forms of digital money not eliminate the need for corporate FX execution and currency risk management?

Digital money changes how value moves, but it’s still denominated in different currencies. Stablecoins and tokenized deposits are linked to fiat currencies, so whenever a payment and obligation are in different currencies, FX conversion remains essential. Today, most stablecoin liquidity is concentrated in USD, with growing but smaller EUR adoption, meaning many users still require FX transactions to move between local currencies and digital money. As a result, the on-ramp into digital money and the off-ramp back into traditional currencies can frequently involve FX execution, meaning currency risk management can remain an important consideration.

Could digital money create new forms of FX exposure for corporate treasurers that do not exist, or are less visible, in today’s payment and banking environment?

Digital money can introduce new considerations alongside traditional currency exposure. For example, issuer quality, reserve management, liquidity and redemption mechanisms, particularly for privately issued stablecoins, could become important considerations for corporate treasurers. New settlement and custody arrangements might also be needed, as digital assets are held in wallets and transferred on distributed ledgers without the centralized settlement infrastructure familiar to traditional FX markets, or an equivalent of today’s CLS settlement framework.

How should treasurers think about the currency risk associated with stablecoins and other privately issued forms of digital money, particularly where their value is linked to an underlying fiat currency?

It’s important for treasurers to understand the potential risks associated with stablecoins, and how they differ from fiat currencies. The resilience of the issuer, the quality of reserve assets and the redemption framework can all influence the stability of a given stablecoin.

Similarly, how reserve assets are collateralized, and the composition and liquidity of those reserves, can affect confidence and redemption under stressed market conditions. Converting into and out of stablecoins also often requires FX transactions, particularly given today’s concentration of liquidity in USD-denominated stablecoins, which can expose treasurers to additional market risk.

Could a corporate’s use of digital money create a mismatch between the timing of a payment, the conversion of currencies and the execution of the associated FX hedge?

It could, especially if only part of the payment process operates on-chain. Stablecoins can settle almost instantly, but conversions between digital money and fiat currencies still depend on traditional banking infrastructure. If either the sender or recipient needs to move between fiat and digital assets, or they transact in different currencies, treasury teams may therefore need to carefully coordinate payment timing, FX execution and hedging to manage potential currency exposure and operational mismatches throughout the payment cycle.

Might digital money eventually enable corporate payments, FX execution and hedging to become part of a single integrated workflow rather than separate processes?

Digital money, combined with APIs and smart contract technology, has the potential to connect payments, FX execution and hedging within a single automated workflow. While the underlying FX transactions do not disappear when different currencies are involved, integrating these activities can significantly improve efficiency, reduce operational risk and simplify treasury processes by minimizing manual intervention. At 360T, with the launch of our 3DX platform, we enabled treasurers to execute both FX and stablecoin transactions in one place, which can help to increase operational efficiency and reduce the risks associated with trading digital currencies.

What would be required to connect digital payment infrastructure with the FX trading platforms, treasury management systems and banking relationships that corporates already use?

Adoption often depends on interoperability rather than replacing existing infrastructure. For many corporates, one possible route may be to access digital money through the same banking relationships, treasury systems and trading platforms they already rely on. Building digital capabilities into established workflows could help lower implementation costs, reduce operational complexity and support institutional adoption without requiring organizations to introduce entirely new technology stacks. Banks are likely to remain central to how these models develop, both through their existing corporate relationships and through their role in shaping new payment, liquidity and settlement services.

Could digital money make realtime or near-real-time treasury a practical reality, and what would that mean for the way corporates identify, aggregate and hedge FX exposures?

Digital money enables faster movement of funds, but faster payments alone do not create real-time treasury. Treasury functions such as forecasting, liquidity management and netting still require broader operational processes. As digital payment infrastructure matures, treasury teams may be able to identify and respond to FX exposures more quickly but achieving fully real-time treasury will depend on wider ecosystem readiness rather than payment speed alone. A phased approach may be appropriate for some organizations. For instance, using T+1 settlement for stablecoin activity before considering more real-time processes can provide one way to adapt operational models gradually.

How might 24/7 digital money networks affect corporate FX workflows when the underlying FX markets and many traditional treasury processes do not operate continuously?

This is one of the key issues market participants are considering as institutional use of digital money develops. Digital money networks can operate around the clock, but fiat funding, banking infrastructure and institutional FX liquidity largely remain tied to traditional market hours. As a result, treasurers may need to manage the interaction between always-on payment networks and existing financial infrastructure, particularly if and as demand for activity outside traditional market hours develops. Greater 24/7 usage would also depend on the availability of competitive FX liquidity, settlement services and supporting market infrastructure beyond today’s traditional operating hours.

Could the growth of digital money increase demand for more automated or rules-based FX execution and hedging by corporate treasurers?

The characteristics of digital money typically support greater automation through APIs and smart contracts, which could create additional use cases for rules-based execution. However, adoption will depend not only on technology but also on organizational readiness.

Many firms still rely on manual FX processes, which suggests that any transition would probably be gradual. If the adoption of digital assets by corporate treasurers continues to grow, this could create greater demand for automated execution and integrated treasury workflows, although success will depend as much on changing operational practices as on technological capability.

Looking five to ten years ahead, do you expect digital money to fundamentally transform corporate FX and treasury operations, or will its greatest impact be to make existing workflows faster, more automated and more integrated?

Current developments suggest that digital money could complement established infrastructure in a number of areas, including some cross-border payment use cases where speed and efficiency may offer clear benefits. One area of potential value is the integration of digital money into existing treasury, payments and FX workflows, which could allow organizations to operate more efficiently and with greater automation while preserving established risk management practices.

At 360T, our focus is on responding to client needs and market developments, working alongside banks and other market participants, and developing relevant capabilities where there is clear demand rather than assuming a single future model for corporate treasury.