Source: Google Cloud; Translated by Jinse Finance
Note: Today, there are reports that Google has launched its own L1 blockchain, the Google Cloud Universal Ledger (GCUL). However, a simple search reveals that Google Cloud has introduced GCUL for quite some time. As early as March 2025, the Chicago Mercantile Exchange and Google successfully completed the first phase of GCUL integration and testing; in June 2025, Google Cloud Web3 Digital Native Engineer Benjamin J. Richter delivered a speech promoting GCUL at the Crypto Valley Conference, titled "Beyond Stablecoins: The evolution of Digital Money," which is also the title of the article introducing GCUL on Google Cloud's official website.
According to Google Cloud, GCUL is a private and permissioned system designed with compliance in mind. Here's how Google Cloud defines GCUL itself:
Beyond Stablecoins: The Evolution of Digital Money
Stablecoins experienced significant growth in 2024, with transaction volumes doubling, organic transaction volumes reaching $5 trillion, and total transaction volumes reaching $30 trillion (data: Visa, Artemis). In contrast, PayPal's annual transaction volume is approximately $1.6 trillion, and Visa's is about $13 trillion. The supply of stablecoins pegged to the dollar has grown to over 1% of the dollar money supply (M2) (data: rwa.xyz). This growth clearly indicates that stablecoins have secured a place in the market.
The demand for higher-quality services is driving a significant transformation in the nearly $30 trillion payment market. Stablecoins have freed themselves from the complexities, inefficiencies, and high costs of traditional payment systems, enabling seamless fund transfers between digital wallets. New solutions are also emerging in capital markets to facilitate the payment segment of digital asset trading, enhancing transparency and efficiency while reducing costs and settlement times.
This article explores the evolving financial landscape and proposes a solution that allows traditional finance and capital markets not only to catch up but also to lead the way.
Private Money: Similarities Between Banknotes and Stablecoins
Stablecoins share many similarities with privately issued banknotes, which began to circulate widely in the 18th and 19th centuries. At that time, the reliability and regulation of bank-issued banknotes varied. These banknotes made transactions more convenient—they were easier to carry, count, and exchange without the need to weigh or assess the purity of gold. To enhance trust in this new form of currency, banknotes were backed by reserves and promised redemption for real-world assets, most commonly precious metals. The number of transactional wallets and liquidity increased significantly. Most banknotes were only accepted in the local area surrounding the issuing bank. For long-distance transactions, they would be redeemed for precious metals or settled between banks. To gain these benefits, users accepted the trade-off between the risk of a single bank default and the value fluctuations based on the perceived solvency of the issuing bank.
Partial reserve banking system and regulation
This has led to significant economic growth and financial innovation. An expanding economy requires a more flexible money supply. Banks have realized that not all depositors will demand redemption simultaneously and recognize that they can profit by lending out a portion of their reserves. The partial reserve banking system emerged, with the circulating banknotes exceeding the reserves held by banks. Poor management, risky lending practices, fraud, and economic downturns led to bank runs, bankruptcies, crises, and depositor losses. These failures prompted stronger regulation and oversight of currency issuance. With the establishment and expansion of central bank authority, these regulatory measures created a more centralized system, improving banking operations, tightening rules, enhancing stability, and increasing public trust in the monetary system.
Today's monetary system: commercial bank currency and central bank currency
Our current monetary system operates on a dual currency model. Commercial banks issue commercial bank currency, which is essentially a liability (IOU) of a specific bank, which is subject to comprehensive regulation. Commercial banks operate on a partial reserve basis, meaning they hold only a small portion of deposits as reserves in central bank currency, while lending out the rest. Central bank currency is a liability of the central bank and is considered risk-free. Liabilities between banks are settled electronically in central bank currency (through RTGS systems like FedWire or Target2). The public increasingly uses commercial bank currency for electronic transactions, while cash transactions (physical central bank currency) are declining. In a single currency system, all commercial bank currencies are interchangeable. Banks compete on service, not on the quality of the currency.
Today's financial infrastructure: decentralized, complex, expensive, and slow
With the rise of computers and networks, currency transactions are recorded electronically, allowing for cashless transactions. Liquidity, accessibility, and product innovation have reached new heights. Solutions vary by country, and cross-border transactions still face significant economic and technical challenges. Correspondent banks need to place idle funds with partner banks, while the complexity of the infrastructure forces banks to limit partnerships. As a result, banks are gradually exiting correspondent banking relationships (down 25% over the past decade), leading to longer payment chains, slower payment speeds, and higher costs. Convenient solutions that simplify these complexities (such as global credit card networks) are costly for businesses facing payment fees.
The fragmentation of the financial system exacerbates trade friction and slows economic growth. (The Economist) estimates that by 2030, fragmented payment systems will have a shocking macroeconomic impact on the global economy, costing up to $2.8 trillion (equivalent to -2.6% of global GDP), which is comparable to more than 130 million jobs (-4.3%).
Fragmentation and complexity also harm financial institutions. In 2022, the annual maintenance cost of outdated payment systems was $37 billion, projected to grow to $57 billion by 2028 (IDC Financial Insights). Additionally, inefficiencies, security risks, and extremely high compliance costs exacerbate the direct revenue loss from the inability to provide real-time payment services (75% of banks struggle to implement any new payment services in outdated systems, with 47% of new accounts coming from fintech companies and new banks).
High payment fees hinder the internationalization of businesses, impacting profitability and valuations. Companies processing a large volume of payments have a strong incentive to reduce payment processing fees. For example, reducing Walmart's annual payment processing fees (approximately $10 billion, assuming an average fee of 1.5% on $700 billion in revenue) to $2 billion could boost earnings per share and stock price by over 40%.
New Infrastructure, New Opportunities
Experiments in the Web3 space have facilitated the development of promising technologies like distributed ledger technology (DLT). These technologies provide a new way of transacting for financial systems by offering a global, always-on infrastructure, with advantages including: support for multi-currency/multi-asset, atomic settlement, and programmability. The financial sector is beginning to transition from isolated databases and complex messaging patterns to transparent, tamper-proof shared ledgers. These modern networks simplify interactions and workflows, eliminating the need for independent, costly, and slow reconciliation processes while removing the technological complexities that hinder speed and innovation.
Disruptors: Stablecoins
Stablecoins operate on decentralized ledgers, enabling near-instant, low-cost global transactions, free from the constraints of traditional banking (operating hours, geography). This freedom and efficiency have driven their explosive growth. High interest rates also make them highly profitable. Profitability, growth, and confidence in the underlying technology continue to attract investments from venture capital and payment processing companies. Stripe acquired Bridge to provide online merchants with the ability to accept stablecoin payments. Visa also offers partner payment and settlement services using stablecoins. Retailers (such as Whole Foods) are accepting and even incentivizing the use of stablecoin payments to reduce transaction fees and receive payments instantly. Consumers can obtain stablecoins within seconds (integration of Coinbase with ApplePay).
Stablecoins face many challenges.
Regulatory: Unlike traditional currency, stablecoins lack comprehensive regulation and oversight. Regulatory efforts in the U.S. are accelerating, while the EU applies electronic money rules to electronic money tokens through MICAR. Deposit protection does not apply to stablecoins.
Compliance: Ensuring compliance with anti-money laundering and sanctions laws is a challenge when anonymous accounts transact on public blockchains (in 2024, 63% of $51.3 billion in illegal transactions on public blockchains involved stablecoins).
Fragmentation: Numerous stablecoins operate across different blockchains, requiring complex bridging and conversions. This fragmentation leads to a reliance on automated bots for arbitrage and liquidity management, which account for nearly 85% of the trading volume (organic trading volume of $5 trillion, total trading volume of $30 trillion).
Infrastructure Scalability: For widespread adoption, the underlying technology must be able to handle massive transaction volumes. By 2024, stablecoin transaction volumes are expected to reach approximately 6 billion transactions, while ACH transaction volumes are expected to be an order of magnitude higher, and credit card transaction volumes are expected to be two orders of magnitude higher.
Economic/Capital Efficiency: Currently, banks expand the money supply by lending multiple times their reserves, driving economic growth. The widespread use of stablecoins would shift banks' reserves, significantly reducing their lending capacity and directly impacting their profitability.
The direct challenges faced by stablecoins—issuer credibility, regulatory ambiguity, compliance/fraud, and fragmentation—are similar to those experienced by early privately issued banknotes.
The large-scale adoption of fully reserved stablecoins would not only disrupt the banking and financial sectors but also overturn the current economic system. Commercial banks issue credit, currency, and liquidity to support economic growth; central banks monitor and influence this process through monetary policy, directly managing inflation while indirectly pursuing other policy objectives such as employment, economic growth, and welfare. A large transfer of reserves from banks to stablecoin issuers could reduce credit supply and increase its cost. This would suppress economic activity, potentially leading to deflationary pressures and challenging the effectiveness of monetary policy implementation.
Stablecoins offer significant advantages to users, especially in cross-border transactions. Competition will drive innovation, expand use cases, and stimulate growth. Higher transaction volumes and increased adoption of stablecoin wallets may lead to a decline in traditional bank deposits, reduced lending, and decreased profitability. As regulations improve, we may see the emergence of partial reserve stablecoin models that blur the lines between them and commercial bank currency, further intensifying competition in payments.
The Innovator's Dilemma
Today, institutions and individuals face two choices: either opt for the familiar and low-risk traditional payment systems that are slow and expensive, or choose modern payment systems that are fast, cheap, convenient, and continuously improving but come with new risks. Increasingly, people are choosing modern payment systems.
Payment service providers also face choices. They can view these innovations as niche markets that do not affect the core customer base of traditional finance, focusing instead on incremental improvements to existing products and systems. Alternatively, they can leverage their brand, regulatory experience, customer base, and networks to lead a new era of payments. By adopting new technologies and forming strategic partnerships, they can meet evolving customer expectations and drive growth.
Improving payments through evolution rather than revolution
The path to the next generation of payments—global, 24/7, multi-currency, and programmable—is feasible, requiring not the reinvention of money but the rethinking of infrastructure. Commercial bank currency and sound traditional financial regulation can address the stability, regulatory clarity, and capital efficiency issues of the current financial system. Google Cloud provides the necessary infrastructure upgrade.
Google Cloud Universal Ledger (GCUL) is a new platform designed to create innovative payment services and financial market products. It simplifies the management of commercial bank currency accounts and facilitates transfers through distributed ledgers, enabling financial institutions and intermediaries to meet the most discerning client demands and compete effectively.
The design philosophy of GCUL is simple, flexible, and secure. Let's analyze this in detail:
Simple: GCUL is provided as a service accessible through a single API, simplifying the integration of multiple currencies and assets. It does not require building or maintaining infrastructure. Transaction fees are stable and transparent, billed monthly (unlike the volatile prepaid cryptocurrency gas fees).
Flexible: GCUL offers unparalleled performance and can scale to any use case. It features programmability for payment automation and digital asset management. It can integrate with the wallet of your choice.
Secure: GCUL is designed with compliance in mind (e.g., KYC-verified accounts, outsourced compliant transaction fees). GCUL is a private and permissioned system (which may become more open as regulations evolve), fully leveraging Google's secure, reliable, durable, and privacy-focused technology.
GCUL brings significant advantages to clients and financial institutions. Clients can experience near-instant transactions, especially in cross-border payments, while enjoying low fees, 24/7 service, and the benefits of payment automation. On the other hand, financial institutions benefit from reduced infrastructure and operational costs, thanks to the elimination of reconciliation steps, reduced errors, simplified compliance processes, and decreased fraud. This frees up resources for financial institutions to develop modern products. Financial institutions can leverage their existing strengths, such as customer networks, licenses, and regulatory processes, to fully control customer relationships.
Payments as a Catalyst for Capital Markets
Similar to payments, capital markets have also undergone significant transformations due to the adoption of electronic systems. Electronic trading initially faced resistance but ultimately transformed the entire industry. Real-time price information and broader access channels facilitated an increase in liquidity, accelerating execution speed, reducing spreads, and lowering costs per transaction. This, in turn, stimulated further growth in market participants (especially retail investors), product and strategy innovations, and overall market trading volume. Despite a significant decrease in transaction prices, the industry has achieved substantial expansion due to advancements in electronic trading, algorithmic trading, market making, risk management, and data analytics.
However, payment challenges remain. The limitations of traditional payment systems lead to settlement cycles of several days, requiring working capital and collateral for risk management. The digital assets and new market structures empowered by distributed ledger technology are hindered by the inherent frictions in connecting traditional and new infrastructures. Independent asset and payment systems exacerbate fragmentation and complexity, preventing the industry from fully benefiting from these innovations.
Google Cloud Universal Ledger (GCUL) is designed to address these challenges, providing a streamlined, secure platform to manage the entire digital asset lifecycle (such as bonds, funds, and collateral). GCUL enables seamless and efficient issuance, management, and settlement of digital assets. Its atomic settlement capability minimizes risk and enhances liquidity, unlocking new opportunities in capital markets. We are exploring how to leverage secure transaction mediums backed by bankruptcy-protected assets (such as central bank deposits or money market funds) provided by regulatory agencies to transfer value. These initiatives facilitate genuine 24/7 capital flows and drive the next wave of financial innovation.
Now is the time to take action
The future of finance is digital, but it doesn't have to be fragmented or expensive. Google Cloud's Universal Ledger provides an easy-to-integrate, scalable, secure, and efficient solution. It builds on a partner model, complementing existing business models rather than competing with them. This design allows our partners in financial services and capital markets to create value for their clients and drive innovation.
