Analysis

Euro Stablecoin Qivalis Backed by 37 Banks

Published

2 months ago

May 20, 2026

Thirty-Seven Banks and a Single Coin: Europe’s Stablecoin Bet Takes Shape

The Qivalis consortium has tripled its membership in a day, marshalling half a continent’s banking sector behind a MiCA-regulated euro stablecoin it intends to launch before the year is out.

On a Wednesday morning in Amsterdam, a quiet announcement reshaped the geography of digital money. Qivalis — the bank-backed consortium building Europe’s answer to dollar-denominated stablecoins — disclosed that 25 more lenders had joined its ranks, pushing total membership to 37 financial institutions spanning 15 European countries. The new arrivals include ABN AMRO, Rabobank, Intesa Sanpaolo, Nordea, Erste Group and the National Bank of Greece. What began in September 2025 as a twelve-bank working group has, in a single morning, become the most broadly backed euro stablecoin project on the continent — and a pointed statement about where European finance believes digital money is heading.

The Dollar’s Digital Grip

To understand why 37 banks would coordinate around a single token, you need to understand the current state of the stablecoin market — and it’s not a flattering picture for the euro. Dollar-denominated tokens account for roughly 99% of the approximately $305 billion global stablecoin market, with euro-pegged assets representing just €770 million — less than one-third of one per cent of outstanding supply. The only sizable euro stablecoin in existence today is Société Générale’s SG-FORGE product, which carries around €64 million in circulation.

That imbalance isn’t merely a curiosity for crypto traders. As financial institutions accelerate their move into tokenised settlement — bonds, real estate, trade finance — the rails on which those transactions run will increasingly require a stable, on-chain currency. If Europe doesn’t supply one, the dollar fills the gap by default. Jan-Oliver Sell, Qivalis’s chief executive, has a phrase for the scenario he’s trying to prevent: digital dollarisation. “At the moment, if you want to operate onchain, you’re effectively forced into the dollar,” he said in March. The consortium’s expansion, announced today, is the most concrete step yet toward making that a historical footnote rather than a permanent condition.

What Qivalis Is — and What It’s Building

The euro stablecoin banks backing Qivalis aren’t assembling a speculative blockchain experiment. The Amsterdam-headquartered venture is building regulated payment infrastructure, and the membership list reads like a roll call of mainstream European finance. Founding members include BNP Paribas, BBVA, CaixaBank, ING, UniCredit and Danske Bank. The 25 institutions that joined today add geographic depth: Irish lenders AIB and Bank of Ireland, Spain’s Banco Sabadell and Bankinter, Poland’s Bank Pekao, Luxembourg’s state-owned Spuerkeess, Sweden’s Handelsbanken and Nordea, Finland’s OP Pohjola, and several others spread across the euro area’s periphery and core alike.

The token itself will be backed one-to-one with euro-denominated assets. At least 40% of reserves will be held in bank deposits, with the remainder allocated to high-quality, short-term eurozone sovereign bonds diversified across EU member states. Holders will be able to redeem around the clock, seven days a week. The technology layer is being provided by Fireblocks, which will supply tokenisation infrastructure, custody services and compliance tooling — including AML and sanctions screening baked into transaction workflows rather than bolted on afterward.

Qivalis is seeking authorisation as an electronic money institution (EMI) from De Nederlandsche Bank, the Dutch central bank, under the EU’s Markets in Crypto-Assets (MiCA) framework. That licence, once granted, would allow the consortium to passport operations across the entire European Economic Area — a significant structural advantage over any single-bank competitor trying to build the same thing in isolation. The commercial launch is targeted for the second half of 2026, with the Amsterdam team in advanced discussions with regulated crypto exchanges and liquidity providers to ensure deep markets from day one.

Howard Davies, chairman of Qivalis’s supervisory board, framed the stakes plainly on Wednesday: “This infrastructure is essential if Europe is to compete in the global digital economy whilst preserving its strategic autonomy.”

Why Bank Coordination Matters — and What MiCA Makes Possible

How does a euro stablecoin work under MiCA?

Under the EU’s Markets in Crypto-Assets regulation, a euro stablecoin must be issued by a licensed electronic money institution, maintain a one-to-one reserve backing with euro-denominated assets, provide holders with continuous redemption rights, and submit to ongoing prudential supervision. Qivalis is structured to satisfy each of these requirements through its Amsterdam EMI entity, with reserves held across multiple rated credit institutions and sovereign bonds of eurozone member states.

That regulatory architecture matters for a reason beyond compliance theatre. Previous attempts at European stablecoin issuance — including small-scale efforts by individual banks — foundered on a structural problem: fragmentation. A coin issued by one bank has limited distribution and shallow liquidity. It doesn’t become a default settlement layer for the broader market; it becomes a proprietary instrument that clients of competing banks won’t readily use. Sell identified this early. “A couple of banks trying to issue their own coins just fragments the space further,” he said. “Bringing institutions together creates the distribution and liquidity needed to make it usable.”

The consortium model solves that problem by making Qivalis’s token a shared issuance — no individual bank owns the token supply, and all 37 members distribute it to their own corporate and institutional clients. The network effect is immediate: on day one of launch, the stablecoin has reach across much of the European banking system. S&P Global Ratings has projected that the euro stablecoin market could grow from roughly €770 million today to as much as €1.1 trillion by 2030, driven primarily by tokenised finance and institutional adoption. That trajectory depends on exactly the kind of unified, regulated issuance Qivalis is attempting to provide.

“We want to be the main issuer of euro stablecoins globally.” — Jan-Oliver Sell, CEO, Qivalis

Second-Order Effects: Settlement, Sovereignty, and the Race Against Washington

The Qivalis announcement arrives inside a broader contest for dominance in digital payment infrastructure — one in which the United States has moved quickly and with legislative backing. US financial institutions, bolstered by recent federal stablecoin legislation, are accelerating the rollout of dollar-backed tokens. Euro-denominated stablecoins currently remain in circulation of less than €1 billion, compared to roughly $300 billion in dollar-linked tokens, according to the Bank of Italy. That asymmetry, if left uncorrected as on-chain finance scales, will compound — not merely persist.

For European corporates, the practical implications are more immediate than they might appear. A business settling a cross-border invoice, clearing a tokenised bond trade, or managing treasury liquidity on blockchain rails today faces an uncomfortable choice: use a dollar-denominated token and accept currency exposure, or use the euro banking system’s traditional settlement infrastructure, which doesn’t operate on-chain at all. Qivalis is explicitly designed to close that gap — allowing a Spanish manufacturer to pay a Polish supplier in real time, using a euro-native token, without touching correspondent banking intermediaries.

The geopolitical dimension is harder to quantify but increasingly discussed in policy circles. If settlement infrastructure for European financial markets defaults to tokens issued by US companies — Tether or Circle being the most prominent — then a portion of European monetary sovereignty effectively sits on American corporate balance sheets. The ECB has flagged this concern repeatedly. Qivalis’s expansion, with its explicit framing around “strategic autonomy,” lands squarely in that debate.

Sell has also signalled that the 37-bank consortium may not be the final count. He told the Financial Times this week that he’s in discussions with non-European banks that operate in countries with significant remittance flows from Europe — a move that would extend Qivalis’s reach into corridors where dollar stablecoins currently dominate peer-to-peer transfers.

The Case for Scepticism

It’s worth pausing on the ECB’s own position, because it isn’t a straightforward endorsement. European Central Bank officials have consistently expressed concern that private stablecoins — even well-designed, MiCA-compliant ones — could drain bank deposits if they scale significantly. The argument runs roughly as follows: if retail customers shift savings into stablecoin wallets, they’re effectively converting insured bank deposits into electronic money claims, reducing the funding base banks use to extend credit. At scale, that changes monetary transmission in ways central banks find difficult to model.

The ECB has warned that private stablecoins could weaken monetary policy if they grow without guardrails — a warning that applies even to bank-led issuances like Qivalis. The consortium’s response is to pitch its design as inherently different: because reserves are held within the regulated banking system rather than in money-market funds, and because the issuer is supervised by a eurozone central bank, the systemic risk profile is fundamentally lower than an offshore issuer. That argument has more credibility than a typical crypto project could muster — but it hasn’t fully resolved the ECB’s institutional wariness.

The Bank for International Settlements has also cautioned that some dollar stablecoins may function more like investment vehicles than money, given their reliance on short-term securities — a concern Qivalis’s reserve design attempts to pre-empt. Still, the gap between a consortium announcement and an operating, liquid, widely adopted token is wide. Licensing delays, exchange integration friction and the simple fact that dollar stablecoins have a multi-year head start in institutional familiarity all represent genuine headwinds.

Then there is the digital euro itself. The ECB’s own CBDC initiative is unlikely to arrive before 2029, which Sell argues creates the window Qivalis needs. Yet if the ECB’s project eventually displaces or restricts private euro stablecoins, the consortium’s business model faces an existential question it hasn’t fully answered.

The history of monetary infrastructure is largely a history of coordination problems solved too late. Europe spent a decade watching dollar-denominated messaging and payment rails embed themselves so deeply into global finance that alternatives became structurally difficult to build. The stablecoin era presents a second chance — and the fact that 37 banks across 15 countries chose a single May morning to make that case together is itself a form of signal worth attending to.

The question Qivalis has not yet answered — and won’t until its token is live, liquid, and in daily use — is whether the coordination it’s assembled on paper can survive contact with the actual market. Thirty-seven signatures is a beginning, not a conclusion.

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Analysis

China Economy 2026: Export Growth Masks Manufacturing Overcapacity

Published

7 hours ago

July 10, 2026

Abdul Rahman

China’s exports have been the good-news story in an otherwise mixed economic picture. They’re not just holding up; through the first four months of 2026 they were running about 14% to 15% above the same period a year earlier, according to figures cited by the US-China Economic and Security Review Commission and Vanguard’s economic outlook. That’s the kind of number that would normally signal a healthy economy. The complication is what’s happening underneath it.

A growth model showing its age

Manufacturing capacity utilization fell to 73.9% in early 2026 — near a decade low outside of the pandemic shutdowns, per the Commission’s bulletin. That’s the tell. China is producing and shipping more, but a growing share of its industrial base is running under capacity, which points to a structural mismatch: the country’s manufacturing engine has outgrown both its domestic consumption and, increasingly, what the rest of the world is willing to absorb without pushback.

Goldman Sachs Research, in a report cited by Goldman Sachs’ own analysis, forecasts 4.8% real GDP growth for 2026 — above consensus expectations of 4.5% — driven substantially by continued export strength and a softening drag from the property downturn. But that same report flags the labor market as a genuine weak spot: hiring, measured across a weighted average of PMI employment sub-indexes, is at its most depressed level in a decade outside Covid, and urban nominal wage growth slowed to just 3.8% year-on-year in Q3 2025.

Why Beijing isn’t reaching for stimulus

Given the export strength, one might expect policymakers to feel less urgency about consumption-side stimulus. That’s roughly what’s happening — and it’s a deliberate choice, not an oversight. Xi Jinping’s government remains committed to dominating high-value manufacturing, which means comprehensive fiscal stimulus aimed at consumers remains unlikely even as domestic demand stays soft, according to the Commission’s bulletin.

The People’s Bank of China is expected to hold its policy rate steady through the rest of the year, preferring targeted structural tools over a broad-based rate cut, per Vanguard’s forecast. That’s a notably cautious stance given how weak the property sector remains — property investment indicators are down 50% to 80% from their 2020–21 peaks, and a “meaningful domestic-demand turnaround remains elusive,” in Vanguard’s own words.

The regulatory push to keep capital at home

Two moves by Chinese regulators in mid-2026 point to where Beijing’s real priority sits: keeping household savings and private capital funneled toward domestic industrial policy rather than flowing overseas. New rules taking effect July 1 restrict outbound investment that could be used to export restricted technology or expertise under the guise of ordinary capital flows, with violations carrying fines, visa restrictions and industry blacklisting, according to the Commission’s bulletin. The regulations follow Beijing’s move to block the founders of AI firm Manus from completing a sale to Meta, even after the company had relocated its headquarters from China to Singapore — a signal that Beijing is willing to reach across borders to keep promising tech assets tethered to domestic or Hong Kong listings.

The currency and trade angle

Goldman’s team makes an out-of-consensus call worth flagging: it expects China’s current account surplus to rise to 4.2% of GDP in 2026, up from 3.6% in 2025, while the broader analyst consensus surveyed by Bloomberg expects a decline to 2.5%. The divergence comes down to export resilience — falling export prices are making Chinese goods more competitive even as the yuan is expected to appreciate slightly, with export-price inflation in dollar terms forecast to turn positive, rising to 0.7% from -2.7% the prior year.

The bottom line

China’s economy in 2026 is a study in contrasts: robust headline export growth sitting on top of underutilized factories, a weak labor market, and a property sector still in its fifth year of decline. The World Bank’s own baseline, published in its country program materials, projects growth moderating toward 4.0% by 2026 — a more conservative read than Goldman’s. Either way, the consensus across forecasters is the same: exports are carrying more of China’s growth than is healthy for the long run, and Beijing’s policy choices this year suggest it’s betting on technological dominance to eventually solve the demand problem, rather than opening the stimulus taps to solve it directly.

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Analysis

Pakistan Circular Debt Crisis 2026: IMF Deadline Missed, Rs 3.44 Trillion

Published

7 hours ago

July 10, 2026

Abdul Rahman

There’s a number that keeps showing up in every conversation about Pakistan’s economy, and it keeps getting bigger: circular debt. As of early July 2026, the gas sector’s share of that debt alone has topped Rs 3.44 trillion, and Islamabad has missed a deadline the IMF set for tariff reforms meant to arrest the slide, according to Dawn.

What circular debt actually is, and why it won’t go away

Circular debt is the chain of unpaid obligations that builds up when the price consumers pay for electricity or gas doesn’t cover what it actually costs to produce and deliver it. Someone in the chain — a power producer, a gas utility, a state-owned enterprise — ends up carrying an IOU, and that IOU gets passed down the line. Earlier this year, IMF officials pressed Pakistan on exactly this dynamic, questioning the government’s plan to zero out gas-sector circular debt, according to Aaj English. At the time, officials said around Rs 150 billion remained payable to companies including Oil and Gas Development Company Limited and Pakistan Petroleum Limited.

Islamabad’s proposed fix included a Rs 5-per-unit levy on gas, dividends from state-owned companies redirected toward debt reduction, and the sale of 35 LNG cargoes annually on the international market. The IMF, per that same reporting, raised pointed questions about whether the plan was actually viable.

The commitments Pakistan has already made

Under its Extended Fund Facility, Pakistan has committed to capping circular debt growth at Rs 300 billion for FY2027 and cutting power-sector subsidies from 0.7% of GDP to 0.6%, according to details reported by ProPakistani. The government has also shifted Nepra’s annual tariff-rebasing cycle from July to January, and Ogra now revises gas tariffs twice a year instead of once.

Structurally, some of this is working. The IMF’s own review in May 2026 credited Pakistan with a primary fiscal surplus of 1.6% of GDP for FY26, broadly in line with program targets, and noted gross reserves had climbed to $16 billion by end-December, up from $14.5 billion six months earlier, according to the IMF’s own press release. That progress unlocked roughly $1.1 billion under the EFF and $220 million under a parallel climate-resilience facility, bringing total disbursements under the two arrangements to about $4.8 billion.

Where the fault lines actually are

The uncomfortable part of this story, laid out by commentary reported in The Hans India, is that revenue targets get IMF scrutiny with great precision, while structural reform of loss-making public enterprises — Pakistan International Airlines and Pakistan Steel Mills chief among them — moves far more slowly. Those enterprises’ losses are absorbed by the national exchequer through subsidies, guarantees, and debt restructuring year after year, and privatization plans keep slipping because the political cost of confronting them is high.

Distribution company inefficiency compounds the problem. In FY25, Discos posted Rs 265 billion in losses, an improvement on FY24’s Rs 276 billion but still a substantial drag, according to Geo News, with Quetta, Peshawar and Hyderabad among the worst-performing utilities.

What happens if the pattern holds

Pakistan’s debt-to-GDP ratio sits between 70% and 80% as of 2026, according to Wikipedia’s economic summary, with debt servicing occasionally consuming two-thirds of government spending. That’s the backdrop against which every circular-debt conversation happens: there is very little fiscal room left to absorb another missed deadline.

The missed gas tariff deadline doesn’t automatically trigger a program breakdown — Pakistan has weathered similar friction points before during its current EFF arrangement. But with the IMF’s own documentation showing persistent concern about the credibility of debt-reduction plans, and with global energy prices still elevated in the aftermath of the Iran war, the margin for further slippage is thin. The next review will likely hinge less on the rhetoric around reform and more on whether the Rs 5 levy and LNG cargo sales actually show up in the numbers.

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Analysis

Malaysia Bets Its 2026 on “Execution” — And the Semiconductor Upcycle Is Doing the Heavy Lifting

Published

5 days ago

July 5, 2026

Abdul Rahman

Malaysia’s government has declared 2026 a year of “execution” and “discipline” as the Anwar Ibrahim administration races to deliver on the 13th Malaysia Plan (RMK13) ahead of elections that could come as early as February 2028, according to Fortune’s interview with economy minister Akmal Nasrullah Mohd Nasir.

A Strong Base to Build From

Malaysia’s economy grew 4.9% in 2025 following 5.1% growth the year before, with unemployment falling to 2.9% — the lowest in a decade — and the ringgit trading at its strongest level in five years. HSBC’s ASEAN economist Yun Liu forecasts 4.6% growth for 2026, citing strength in electrical equipment manufacturing, tourism, and sound government policy, while Nomura economists have projected an even more bullish 5.2%, pointing to infrastructure spending under RMK13.

The ASEAN+3 Macroeconomic Research Office (AMRO) projects growth moderating slightly to 4.6% from an estimated 4.9% in 2025, describing Malaysia’s performance as reflecting its “entrenched position in global semiconductor and electronics value chains” and the broader global tech upcycle, according to AMRO’s assessment of Malaysia’s investment upcycle.

Navigating Washington Without Picking Sides

Malaysia’s trade relationship with the US has been turbulent. Washington imposed 25% tariffs on Malaysian goods in April 2025, rattling the country’s export-led economy, before a deal reduced US duties to 19% in exchange for Malaysia lowering tariffs on select American products, with exemptions carved out for aviation components and electrical equipment. Malaysia’s trade hit a record high of more than 3 trillion ringgit (roughly $780 billion) last year despite the friction.

Deputy finance minister Liew Chin Tong has framed Malaysia’s positioning explicitly around neutrality: the country is “not China, not the US,” a stance he argues gives Malaysia a strategic advantage in both geopolitical and supply-chain terms, according to Fortune’s reporting from the Forum Ekonomi Malaysia summit.

Capital Is Flowing In — From Everywhere

Malaysia recorded 22.8 billion ringgit (about $5.8 billion) in foreign direct investment in the first quarter of 2026, a 6.0% year-on-year increase, moderating from the prior quarter’s 48.7% surge. Inflows into information and communication technology services remained particularly strong, with China, Hong Kong, and Singapore serving as the primary capital sources, according to McKinsey’s Southeast Asia quarterly economic review. Bank Negara Malaysia has held its policy rate steady following a pre-emptive 25 basis-point cut in July 2025, with headline inflation projected to average just 2.0% in 2026.

The Long Game: Semiconductors, Rare Earths, and Nuclear Power

Beyond RMK13’s near-term targets, Malaysian officials are positioning the country’s industrial strategy around decades, not years. Minister Akmal has reiterated commitments to eliminate coal use by 2044 and reach net zero by 2050, while confirming Malaysia is actively “exploring the potential” of nuclear power to meet the energy demands of its expanding data-center and semiconductor sectors. AMRO’s structural policy guidance urges Malaysia to develop domestic semiconductor and rare-earth capabilities as a hedge against ongoing US-China “geoeconomic fracturing,” positioning the country as a trusted neutral hub for global manufacturers diversifying away from concentrated exposure to either superpower.