ZURICH, Switzerland–Four of the world’s biggest banks are developing a system to enable financial markets to make payments and settle transactions quickly using blockchain technology.
The effort is being led by UBS, which has developed a "Utility Settlement Coin" (USC) that is a digital cash equivalent of each of the major currencies backed by central banks, such as the dollar or euro, rather than a decentralized new digital currency such as bitcoin.
According to Reuters, the USC would be convertible at parity with a bank deposit in the corresponding currency, making it fully backed by cash assets at a central bank. Spending a USC would be the same as spending the real currency it is paired with, UBS told Reuters.
"Digital cash is a core component of a future financial market fabric based on blockchain technologies," UBS Investment Bank's head of fintech innovation Hyder Jaffrey told Reuters.
UBS launched its initiative in September 2015 with London-based blockchain company Clearmatics, and has been joined on the project by BNY Mellon, Deutsche Bank, Santander, and brokerage ICAP.
Reuters noted that the World Economic Forum said in a report this month that more than 90 central banks are discussing the use of blockchain, and estimated that 80% of the world's commercial banks would have initiated projects using the technology by 2017.