Team Utility Settlement Coin Update: UBS, Clearmatics, Deutsche Bank, Santander, ICAP and BNY Mellon Continuing Blockchain Project

 Team “Utility Settlement Coin,” comprised of UBS, Clearmatics, Deutsche Bank, Santander, ICAP and BNY Mellon, has issued a brief update about its use blockchain technology to allow financial markets to complete financial transactions more quickly and smoothly.  In late August,  UBS Head of Strategic Investment & Fintech Innovation Hyder Jaffrey explained the initiative’s importance:

Hyder Jaffrey“Digital cash is a core component of a future financial market fabric based on blockchain technologies. 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.”

The system branded “Utility Settlement Coin” (USC)  is not a new decentralized digital currency such as bitcoin, but rather a digital cash counterpart of all major currencies backed by central banks. The USC will be converted into a corresponding currency in accordance with a bank deposit, which will make it entirely backed by cash assets at a central bank.

UBS assured that using USC would be equivalent to using the real corresponding currency. This project aims to revolutionize the entire settlement system used by banks. The current system operates in such a way that it might take a few days to finalise and which sets the financial industry back $65-$80 billion per year. Other equivalents of USC are currently being developed by many other companies, such as, for instance, SETL. Some banks are devising their own projects, but the fact is this is the first attempt of big banks to collaborate in order to enhance a digital cash settlement system.

Financial regulatory authorities are now trying to evaluate the implications of the system, according to the statement. The primary aim is to determine whether the system can meet governance, technical, and legal demands.This month, the World Economic Forum reported that over ninety central banks are intending to implement blockchain. It is also mentioned in the report that by 2017, 80% of all global commercial banks will have initiated projects using the technology.

edward-buddWhile the implementation of USC has become a highly discussed topic in the industry of the financial service, Deutsche Bank Global Transaction Banking Chief Digital Officer Edward Budd noted that  “[The USC] raises questions, and possibilities, over a fundamental market structure principle: who can have access to central bank money and how.”

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