Designing bank-grade governance: Risk and control frameworks for the use of fiat-backed stablecoins in treasury and transaction banking

Traditional payment infrastructure, particularly for cross-border corridors and exotic currency pairs, imposes temporal constraints that create measurable inefficiencies in corporate treasury operations and working-capital management. While domestic real-time payment systems have substantially narrowed settlement windows in major currencies, cross-border settlement remains fragmented across time zones and banking calendars. This paper examines fiat-backed stablecoins as programmable settlement infrastructure that can compress finality windows while introducing novel operational, counterparty, compliance and technical risks. Unlike algorithmic or crypto-collateralised stablecoins that have experienced catastrophic failures, fiat-backed designs maintain reserves in traditional assets and are increasingly subject to regulatory classification as electronic money instruments rather than speculative assets, as evidenced by the EU’s Markets in Crypto-Assets Regulation (MiCA) framework. This paper contributes: (1) a four-dimensional risk-control framework synthesised from operational risk management principles and adapted for stablecoin-specific exposures (reserve quality, redemption mechanics, compliance orchestration, technical reliability); (2) a reproducible total cost of payment (TCP) methodology that enables comparative analysis across legacy rails (cards, automated clearing houses, wires, real-time payments) and stablecoins; (3) a multi-dimensional evaluation comparing settlement infrastructure across finality, availability, geographic reach, programmability, cost, regulatory clarity and counterparty risk; (4) a policy-current mapping to the EU’s MiCA application schedule and US/UK supervisory trajectories; and (5) a network-selection rubric with audit-ready control taxonomy and measurable key risk indicators. This article is also included in the Business & Management Collection which can be accessed at http://hstalks/business.