UBS and Clearmatics have joined with BNY Mellon, Deutsche Bank, Icap and Santander to advance the Utility Settlement Coin, an asset-backed digital cash instrument implemented on distributed ledger technology, according to a statement.
“Digital cash is a core component of a future financial market fabric based on blockchain technologies,” commented UBS Head of Strategic Investment & Fintech Innovation Hyder Jaffrey. “There are several digital cash models being explored across the Street. The Utility Settlement Coin is focussed on facilitating a new model for digital central bank cash.”
UBS and Clearmatics floated the model in September 2015 to validate the potential benefits of USC for capital efficiency, settlement and systemic risk reduction and as a harbinger for central bank backed digital cash issuance. The virtual coin acts as a proxy for physical currency assets held in deposit at the central bank. The project was initially incubated as part of the UBS Crypto 2.0 Pathfinder Program, the Swiss bank’s R&D blockchain lab.
“Recent discussion of digital currencies by central banks and regulators has confirmed their potential significance,” Santander Head of R&D Julio Faura
commented in the statement. “The USC is an essential step towards a future financial market on distributed ledger technologies.”
The USC concept will be developed through a series of short iterative phases and platform deployments, Jeffrey added. Clearmatics has been tasked with delivering early releases of the technology platform underpinning the model, while the bank backers engage with central banks and regulators on progress.