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Group includes US, UK, Swiss, Japanese, Canadian lenders

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Banks seeking to find their way as stablecoin demand grows

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Announcement follows European bank initiative last month

(Adds details from paragraph 2 onwards)

Oct 10 (Reuters) - A group of banks including Bank of

America ( BAC ) , Citi, Deutsche Bank, Goldman

Sachs ( GS ) and UBS will work together to explore

creating blockchain-based assets pegged to G7 currencies, the

banks said on Friday.

The project, which is in its early stages, will explore

creating assets on public blockchains which are pegged 1:1 to

real-world currencies - known as stablecoins.

Various banks and other financial institutions have

announced plans to look at launching stablecoins, as soaring

crypto prices and U.S. President Donald Trump's support for the

sector has sparked a revival of interest in the idea of using

blockchain in the mainstream financial system.

The market for stablecoins, however, is dominated by the

El Salvador-based Tether, which accounts for $179 billion of the

$310 billion worth of stablecoins in circulation, according to

CoinGecko.

"The objective of the initiative is to explore whether a

new industry-wide offering could bring the benefits of digital

assets and enhance competition across the market, while ensuring

full compliance with regulatory requirements and best practice

risk management," the statement said.

The banks involved are Santander, Bank of

America ( BAC ), Barclays ( BCS ), BNP Paribas, Citi

, Deutsche Bank, Goldman Sachs ( GS ), MUFG Bank

Ltd MTFGTU.UL>, TD Bank Group and UBS.

France's Societe Generale, which was not

included in the list, became the first major bank to issue a

dollar-backed stablecoin through its digital asset subsidiary

earlier this year. The token has not been widely adopted, with

just $30.6 million in circulation.

A separate consortium

of nine European banks including heavyweights ING

and UniCredit, said last month they were forming a new

company to launch a euro-denominated stablecoin.