Google: What do we want to do with the launch of Google Cloud Universal Ledger (GCUL)?

Source: Google Cloud; Compiled by Golden Finance. Note: News broke today that Google has launched its own Level 1 blockchain, Google Cloud Universal Ledger (GCUL). However, a simple search reveals that Google Cloud has been working on GCUL for a while. As early as March 2025, CME and Google successfully completed the first phase of integration and testing of GCUL. In June 2025, Google Cloud Web3 digital native engineer Benjamin J. Richter delivered a speech at the Crypto Valley Conference to promote GCUL. The title of his speech was "Beyond Stablecoins: The evolution of Digital Money", which is exactly the title of the article on Google Cloud's official website introducing GCUL. According to Google Cloud, GCUL is a private, permissioned system designed with compliance in mind. Here's how Google Cloud defines GCUL: Beyond Stablecoins: The evolution of digital currencies Money")

Stablecoins experienced significant growth in 2024, with transaction volume tripling to $5 trillion in organic volume and $30 trillion in total volume (data: Visa, Artemis). In comparison, PayPal's annual transaction volume is approximately $1.6 trillion and Visa's is approximately $13 trillion. The supply of stablecoins pegged to the US dollar has grown to over 1% of the US dollar money supply (M2) (data: rwa.xyz). This growth clearly shows that stablecoins have gained a foothold in the market.

The demand for better services is driving a major shift in the nearly $3 trillion payments market. Stablecoins break free from the complexity, inefficiency and high costs of traditional payment systems and enable seamless fund transfers between digital wallets. New solutions are also emerging in the capital markets. This paper explores the evolving financial landscape and proposes a solution that allows traditional finance and capital markets to not only catch up, but to lead the way. Private Currencies: Similarities Between Paper Money and Stablecoins Stablecoins share many similarities with privately issued paper money, which began to circulate widely in the 18th and 19th centuries. At the time, bank-issued banknotes had varying degrees of reliability and regulation. These notes made transactions more convenient – ​​they were easier to carry, count, and exchange, without the need to weigh or assess the purity of the gold. To foster trust in this new form of money, the notes were backed by reserves and promised to be exchanged for real-world assets, most commonly precious metals. Trading Wallets The volume and liquidity of banknotes increased dramatically. Most banknotes were accepted only in the local area near the issuing bank. For longer-distance transactions, they were exchanged for precious metals or cleared between banks. To obtain these benefits, users accepted a trade-off between the risk of a single bank default and fluctuations in value based on the perceived solvency of the issuing bank.

Fractional Reserve Banking and Regulation

Remarkable economic growth and financial innovation followed. An expanding economy required a more flexible money supply. Banks noticed that not all depositors would demand redemptions at the same time and realized that they could profitably lend out a fraction of their reserves. Fractional reserve banking arose, with more banknotes in circulation than banks held in reserves. Poor management, risky lending practices, fraud, and economic downturns led to bank runs, bankruptcies, crises, and depositor losses. These failures prompted the Increased regulation and supervision of money issuance. As central banks established and expanded their powers, these regulations created a more centralized system with improved banking practices, stricter rules, greater stability, and greater public trust in the monetary system.

Today’s Monetary System: Commercial Bank Money and Central Bank Money

Our current monetary system operates on 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 operate on a fractional reserve model, meaning that they hold only a small portion of deposits as reserves against central bank money and hold the rest to lend. 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 (via FedWire or RTGS systems such as Target2). The public can only use commercial bank money for electronic transactions, and the use of cash (physical central bank money) for transactions is decreasing. Under a single currency system, all commercial bank money is fungible. Banks compete on service, not on the quality of money.

Today's financial infrastructure: fragmented, complex, expensive and slow

With the rise of computers and the Internet, monetary transactions are recorded electronically and can be conducted without cash. Liquidity, accessibility and product innovation have reached new heights. Solutions vary from country to country, and cross-border transactions remain economically and technically difficult. Correspondent banks need to park idle funds with partner banks, and the complexity of the infrastructure has forced banks to limit their partnerships. As a result, banks are gradually withdrawing from correspondent banking relationships (which have declined over the past decade). 25%), which means longer payment chains, slower payments and higher costs. Convenient solutions to simplify these complexities, such as global credit card networks, are costly for businesses that pay them. Most improvements have been focused on the front end, and innovation in payment processing infrastructure has been slow. The fragmentation of the financial system has exacerbated trade frictions and slowed economic growth. The Economist estimates that by 2030, a fragmented payment system will have a staggering macroeconomic impact on the global economy, with losses of up to $2.8 trillion (-2.6% of global GDP) and the equivalent of more than 130 million jobs (-4.3%). Fragmentation and complexity are also taking a toll on financial institutions. The annual maintenance cost of outdated payment systems was $37 billion in 2022 and is expected to grow to $57 billion by 2028 (IDC Financial Insights). Furthermore, inefficiencies, security risks, and extremely high compliance costs exacerbate the direct revenue losses from not being able to offer real-time payment services (75% of banks struggle to implement any new payment services in outdated systems, and 47% of new accounts come from fintechs and neobanks). High payment fees hinder the international development of businesses, impacting profitability and valuations. Companies that process large volumes of payments have a strong incentive to reduce payment processing fees. Let's take Walmart as an example – reducing its annual payment processing fees of approximately $10 billion (assuming an average fee 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 field have led to distributed ledger technology (DLT) The development of promising technologies such as stablecoins. These technologies offer a completely new way for the financial system to transact by providing a global, always-on infrastructure with advantages such as multi-currency/multi-asset support, atomic settlement, and programmability. The financial sector has begun to transition from siloed databases and complex messaging models to transparent, immutable shared ledgers. These modern networks streamline interactions and workflows, eliminating the need for independent, costly, and slow reconciliation processes, and removing the technical complexities that hinder speed and innovation.

Disruptor: Stablecoins

Based on decentralized ledgers, stablecoins enable near-instant, low-cost global transactions, free from the constraints of traditional banking (business hours, geography). This freedom and efficiency have fueled their explosive growth. High interest rates have also made them highly profitable. Profits, growth, and growing confidence in the underlying technology have attracted investment from venture capital and payment processing companies. Stripe acquired Bridge to enable online merchants to accept stablecoin payments. Visa also provides payment and settlement services to partners using stablecoins. Retailers (such as Whole Foods) are also using stablecoins. Foods) are accepting and even incentivizing the use of stablecoins for payments, citing lower transaction fees and instant payment. Consumers can access stablecoins in seconds (Coinbase's integration with Apple Pay).

Stablecoins face many challenges.

• Regulation: Unlike traditional currencies, stablecoins lack comprehensive regulation and oversight. Regulatory efforts are accelerating in the US, and the EU is applying e-money rules to e-money tokens through MICAR. Depositor protections do not apply to stablecoins.

• Compliance: Ensuring compliance with anti-money laundering and sanctions laws is a challenge when anonymous accounts transact on public blockchains (63% of the $51.3 billion in illicit transactions on public blockchains in 2024 involved stablecoins).

• Fragmentation: Numerous stablecoins operate across different blockchains, requiring complex bridging and conversions. This fragmentation has led to a reliance on automated bots for arbitrage and liquidity management, which account for nearly 85% of trading volume (organic volume 5 trillion, with a total transaction volume of $30 trillion). Infrastructure Scalability: To achieve widespread adoption, the underlying technology must be able to handle massive transaction volumes. In 2024, stablecoin transactions will reach approximately 6 billion, with ACH transactions approximately an order of magnitude higher and card transactions two orders of magnitude higher. Economic/Capital Efficiency: Currently, banks drive economic growth by expanding the money supply by lending many times their reserves. Widespread stablecoin use would divert banks' reserves, significantly reducing their lending capacity and directly impacting their profitability. Immediate challenges facing stablecoins—issuer credibility, regulatory ambiguity, compliance/fraud, and fragmentation—are similar to those faced by early privately issued banknotes. 192);">The large-scale adoption of fully-reserve stablecoins would not only disrupt the banking and financial sectors but also upend 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 and indirectly pursuing other policy goals such as employment, economic growth, and welfare.A large transfer of reserves from banks to stablecoin issuers could reduce the supply of credit and increase its cost. This would suppress economic activity, potentially lead to deflationary pressures, and pose a challenge to 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 the adoption of more stablecoin wallets could lead to fewer deposits, fewer loans, and lower profitability for traditional banks. As regulation improves, we may see the emergence of a fractional reserve stablecoin model, blurring the lines between them and commercial bank money and further intensifying competition in the payments sector.

  The Innovator's Dilemma

  Today, institutions and individuals face two choices: either choose familiar and low-risk stablecoins or... Payment service providers face a choice too. They can either choose traditional payment systems that are risky but slow and costly, or modern payment systems that are fast, cheap, convenient, and constantly improving, but come with new risks. More and more people are choosing modern payment systems.

  Payment service providers also face a choice. They can view these innovations as niche markets that do not affect the core customer base of traditional finance, and focus on incremental improvements to existing products and systems. Or, they can leverage their brands, regulatory experience, customer base, and networks to lead the new era of payments. By embracing new technologies and forming strategic partnerships, they can meet changing customer expectations and drive growth.

  Improving payments through evolution, not revolution

  The path to the next generation of payments—global, 24/7, multi-currency, and programmable—is available, and It does not require reinventing money, only reimagining the infrastructure. Commercial bank money and sound traditional financial supervision can address the stability, regulatory clarity, and capital efficiency issues of the existing financial system. Google Cloud provides the necessary infrastructure upgrades. Google Cloud Universal Ledger (GCUL) is a new platform designed to build innovative payment services and financial market products. It 192);">Simplify the management of commercial bank currency accounts and facilitate transfers through distributed ledgers, allowing financial institutions and intermediaries to meet the needs of their most discerning customers and compete effectively. GCUL is designed to be simple, flexible, and secure. Let's break it down:

  • Simple: GCUL is provided as a service and accessible through a single API, simplifying the integration of multiple currencies and assets. It eliminates the need to build and maintain infrastructure. Transaction fees are stable, transparent, and billed monthly (unlike the volatile prepaid cryptocurrency gas fees).

  • Flexible: GCUL offers unparalleled performance and is scalable to any use case. It is programmable, enabling payment automation and digital asset management. It can be integrated with the wallet of your choice.

  • Secure: GCUL is designed with regulatory compliance in mind (e.g., KYC verified accounts, outsourcing of regulatory transaction fees). GCUL is a private and permissioned system (which may become more open as regulations evolve) that leverages Google’s Safe, reliable, durable and privacy-focused technology.  

  GCUL offers significant advantages to both customers and financial institutions. Customers experience near-instant transactions, especially for cross-border payments, with the added benefit of low fees, 24/7 service and payment automation. Financial institutions, on the other hand, benefit from reduced infrastructure and operating costs due to the elimination of reconciliation steps, reduced errors, simplified compliance processes and reduced fraud. This frees up resources for financial institutions to develop modern products. Financial institutions can leverage their existing advantages, such as customer networks, licenses and regulatory processes, to maintain full control over customer relationships.

  Payments are a catalyst for capital markets

  Similar to payments, capital markets have undergone significant changes due to the adoption of electronic systems. Electronic trading initially encountered resistance but ultimately revolutionized the industry. Real-time prices Information and wider access have led to increased liquidity, resulting in faster execution, lower spreads and lower costs per trade. This, in turn, has spurred further growth in market participants (particularly individual investors), product and strategy innovation, and overall market volume. Despite a significant decline in the price per trade, the industry has expanded significantly with advances in electronic trading, algorithmic trading, market making, risk management, data analytics and more.

  However, payment challenges remain. Limitations of traditional payment systems result in settlement cycles lasting several days, which require working capital and collateral for risk management. Digital assets and new market structures enabled by distributed ledger technology are hindered by inherent friction in connecting traditional and new infrastructure. Independent asset and payment systems exacerbate fragmentation and complexity, preventing the industry from fully benefiting from these innovations.

  Google Cloud Universal Ledger The Google Cloud (GCUL) addresses these challenges by providing a streamlined, secure platform for managing the entire digital asset lifecycle (e.g., 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 the capital markets. We are exploring how to transfer value using a secure medium of exchange provided by a regulated institution and backed by bankruptcy-protected assets (e.g., central bank deposits or money market funds). These initiatives foster true 24/7 capital mobility and drive the next wave of financial innovation.

  The time to act is now

  The future of finance is digital, but it doesn't have to be fragmented or expensive. Google Cloud's Universal Ledger provides an easily integrated, scalable, secure, and efficient solution. Built on a partnership model, it complements existing business models, not competes with them. This design enables our partners in financial services and capital markets to create value for their customers and drive innovation.