Source: Google Cloud; compiled by Golden Finance
Note: Today, it was reported that Google launched its own L1 blockchain, Google Cloud Universal Ledger (GCUL). However, a simple search reveals that Google Cloud has long introduced GCUL. As early as March 2025, the CME and Google successfully completed the first phase of GCUL integration and testing; in June 2025, Google Cloud's Web3 digital native engineer Benjamin J. Richter presented GCUL at the Crypto Valley Conference, with the presentation 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's introduction, GCUL is a private and licensed system designed with compliance in mind. Let's look at how Google Cloud defines GCUL itself:
Beyond Stablecoins: The Evolution of Digital Money
Stablecoins experienced significant growth in 2024, with trading volume doubling, organic trading volume reaching $5 trillion, and total trading volume reaching $30 trillion (data: Visa, Artemis). In comparison, PayPal's annual trading volume is approximately $1.6 trillion, while 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 payments market. Stablecoins break free 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 enables traditional finance and capital markets to not only catch up but also 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 regulatory oversight of bank-issued banknotes varied. These banknotes made transactions more convenient—they were easier to carry, count, and redeem without weighing or assessing the purity of gold. To enhance trust in this new form of currency, banknotes were backed by reserves and promised to be redeemable for real-world assets, most commonly precious metals. The number and liquidity of trading wallets significantly increased. Most banknotes were accepted only in the local area around the issuing bank. For long-distance transactions, they would be exchanged for precious metals or settled between banks. To obtain these benefits, users accepted the trade-off between the default risk of a single bank and the value volatility based on the perceived creditworthiness of the issuing bank.
Fractional Reserve Banking System and Regulation
This resulted in significant economic growth and financial innovation. The continuously expanding economy requires a more flexible money supply. Banks realized that not all depositors would demand redemption at the same time and recognized the opportunity to profit by lending out a portion of reserves. The fractional reserve banking system emerged, where the amount of currency in circulation exceeded 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 increased regulation and oversight of money issuance. With the establishment and expansion of central bank powers, these regulatory measures created a more centralized system, improved banking operations, stricter rules, and greater stability, increasing public trust in the monetary system.
Today's Monetary System: Commercial Bank Money and Central Bank Money
Our current monetary system follows a dual currency model. Commercial banks issue commercial bank money, which is essentially a liability (IOU) of a specific bank that is fully regulated. Commercial banks adopt a fractional reserve model, meaning they hold only a small portion of deposits as reserves in central bank money, while the rest is used for lending. Central bank money is a liability of the central bank and is considered risk-free. Liabilities between banks are settled electronically in central bank money (through RTGS systems like FedWire or Target2). The public can only conduct electronic transactions using commercial bank money, and the phenomenon of using cash (physical central bank money) for transactions is decreasing. Under a single currency system, all commercial bank money is interchangeable. Banks compete on service rather than on the quality of the money.
Today's Financial Infrastructure: Fragmented, Complex, Expensive, and Slow
With the rise of computers and networks, currency transactions are recorded electronically, eliminating the need for cash. Liquidity, accessibility, and product innovation have reached new heights. Solutions vary by country, and cross-border transactions remain fraught with economic and technical challenges. Correspondent banks need to deposit idle funds with partner banks, and the complexity of infrastructure forces banks to limit partnerships. As a result, banks are gradually withdrawing from correspondent banking relationships (a decline of 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 paying transaction fees. Most improvements focus on the front end, and innovation in payment processing infrastructure is slow.
The fragmentation of the financial system exacerbates trade friction and slows down economic growth. (The Economist) estimates that by 2030, fragmented payment systems will have a staggering macroeconomic impact on the global economy, resulting in losses of up to $2.8 trillion (equivalent to -2.6% of global GDP), corresponding to more than 130 million jobs (-4.3%).
Fragmentation and complexity have also harmed financial institutions. In 2022, the annual maintenance cost of outdated payment systems was $37 billion, expected to grow to $57 billion by 2028 (IDC Financial Insights). Additionally, inefficiencies, security risks, and extremely high compliance costs exacerbate direct revenue losses from the inability to provide real-time payment services (75% of banks struggle to implement any new payment services on outdated systems, with 47% of new accounts coming from fintech companies and neobanks).
High payment fees hinder the international development of businesses, impacting profitability and valuation. Companies handling large volumes of payments have a strong incentive to reduce payment processing fees. Take Walmart as an example—reducing its annual payment processing fees of approximately $10 billion (assuming an average cost of 1.5% on $700 billion in revenue) to $2 billion could increase earnings per share and stock price by over 40%.
New Infrastructure, New Opportunities
Experiments in the Web3 space have fostered the development of promising technologies such as Distributed Ledger Technology (DLT). These technologies provide a new way of transacting within the financial system by offering a globally accessible, always-on infrastructure, with benefits including multi-currency/multi-asset support, atomic settlement, and programmability. The financial sector has begun shifting 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, and removing technological complexities that hinder speed and innovation.
Disruptors: Stablecoins
Stablecoins, based on decentralized ledgers, enable near-instantaneous, low-cost global transactions, unrestricted by traditional banking (business hours, geographical limits). This freedom and efficiency have driven their explosive growth. High interest rates have also made them lucrative. The profits, growth, and increasing confidence in the underlying technology have attracted investments from venture capital and payment processing companies. Stripe acquired Bridge to provide online merchants with the capability to accept stablecoin payments. Visa also offers partner payment and settlement services using stablecoins. Retailers (such as Whole Foods) are accepting and even incentivizing stablecoin payments to lower transaction costs and receive payments instantly. Consumers can obtain stablecoins within seconds (Coinbase's integration with ApplePay).
Stablecoins face many challenges.
Regulation: Unlike traditional money, 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. Depositor protection does not apply to stablecoins.
Compliance: Ensuring compliance with anti-money laundering and sanctions laws is a challenge when anonymous accounts conduct transactions on public blockchains (in 2024, 63% of the $51.3 billion in illegal transactions on public blockchains involved stablecoins).
Fragmentation: Numerous stablecoins operate across different blockchains, requiring complex bridging and conversion. This fragmentation leads to reliance on automated bots for arbitrage and liquidity management, with these bots accounting for nearly 85% of trading volume (organic trading volume of $5 trillion and total trading volume of $30 trillion).
Infrastructure Scalability: To achieve widespread adoption, the underlying technology must handle massive transaction volumes. In 2024, stablecoin transaction volume is approximately 6 billion, with ACH transaction volume around an order of magnitude higher and card transaction volume two orders of magnitude higher.
Economic/Capital Efficiency: Currently, banks expand the money supply by lending several times the reserves they hold, thus driving economic growth. The widespread use of stablecoins will transfer banks' reserves, significantly reducing their lending capacity and directly impacting their profitability.
The direct challenges facing stablecoins—issuer credibility, regulatory ambiguity, compliance/fraud, and fragmentation—are similar to those faced by privately issued banknotes in earlier times.
The widespread adoption of fully reserved stablecoins would not only disrupt the banking and financial industries but could 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 substantial transfer of reserves from banks to stablecoin issuers could reduce credit supply and increase its cost. This would suppress economic activity, potentially lead to deflationary pressures, and challenge 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 trading volumes and increased adoption of stablecoin wallets may lead to reduced traditional bank deposits, lower lending, and decreased profitability. As regulations become more refined, we may see the emergence of fractional reserve stablecoin models, blurring the lines between them and commercial bank currencies, further intensifying competition in the payments space.
The Innovator's Dilemma
Today, institutions and individuals face two choices: either opt for familiar but slow and costly traditional payment systems or choose fast, cheap, convenient, and continuously improving modern payment systems that come with new risks. An increasing number of 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, around-the-clock, multi-currency, and programmable—is feasible without reinventing money, just by reimagining infrastructure. Commercial bank currency and sound traditional financial regulation can address the issues of stability, regulatory clarity, and capital efficiency in the existing financial system. Google Cloud provides the necessary infrastructure upgrades.
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 demands of their most discerning clients and compete effectively.
The design philosophy of GCUL is simplicity, flexibility, and security. Let's analyze it in detail:
Simplicity: GCUL is offered as a service and can be accessed via a single API, simplifying the integration of multiple currencies and assets. It eliminates the need to build and maintain infrastructure. Transaction fees are stable and transparent, billed monthly (unlike the volatile prepaid cryptocurrency gas fees).
Flexibility: GCUL offers unparalleled performance and can scale to any use case. It features programmability, enabling payment automation and digital asset management. It can integrate with the wallet of your choice.
Security: GCUL is designed with compliance in mind (e.g., KYC verification of accounts, outsourcing of compliant transaction fees). GCUL is a private and licensed system (which may become more open as regulations evolve), leveraging Google's security, reliability, durability, and privacy-focused technology.
GCUL brings significant advantages to customers and financial institutions. Customers can experience near-instantaneous transactions, particularly in cross-border payments, while enjoying low fees, around-the-clock service, and payment automation. On the other hand, financial institutions benefit from reduced infrastructure and operational costs due to the elimination of reconciliation processes, fewer errors, simplified compliance procedures, and reduced 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 take full control of customer relationships.
Payments are the catalyst for capital markets
Similar to payments, capital markets have also undergone significant transformation due to the adoption of electronic systems. Electronic trading initially faced resistance but ultimately revolutionized the entire industry. Real-time price information and broader access channels facilitated increased liquidity, accelerating execution speeds, reducing spreads, and lowering transaction costs. This, in turn, spurred further growth in market participants (especially individual investors), product and strategy innovation, and overall market trading volume. Despite significant reductions in the price per transaction, the entire industry has achieved substantial expansion due to advancements in electronic trading, algorithmic trading, market making, risk management, and data analysis.
However, payment challenges persist. The limitations of traditional payment systems result in settlement cycles lasting several days, requiring working capital and collateral for risk management. Digital assets and new market structures enabled by distributed ledger technology are hindered by inherent frictions in the connection processes between 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) aims to address these challenges by providing a streamlined and secure platform to manage the entire lifecycle of digital assets (such as bonds, funds, and collateral). GCUL enables seamless and efficient issuance, management, and settlement of digital assets. Its atomic settlement feature minimizes risk and enhances liquidity, thereby unlocking new opportunities in capital markets. We are exploring how to leverage a secure medium of exchange supported by bankruptcy-protected assets (such as central bank deposits or money market funds) provided by regulators to transfer value. These initiatives facilitate true around-the-clock capital flow and drive the next wave of financial innovation.
Now is the time to take action
The future of finance is digital, but it does not have to be fragmented or expensive. Google Cloud's Universal Ledger provides an easy-to-integrate, scalable, secure, and efficient solution. It is built on a partner model and complements 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.