World's largest banks plan to introduce a crypto disruptor: the utility settlement coin
Ten of the world's biggest banks are reportedly now part of a project to create a new digital currency for financial markets; the new coin has the power to blow rival cryptocurrencies out of the market, according to financial consultant Luigi Wewege told Radio Sputnik.
Banks on Blockchain: If You Can't Beat 'Em, Join 'Em
Ten of the largest banks seemed to have recently had an awakening of sorts when it comes to Blockchain and the cryptocurrency space. They’ve joined forces and plan to create their own digital currency to complete their transactions critical to their industry.
Recognizing that the cryptocurrency space could not function without the formidable Blockchain technology, these banks also plan to underpin their currency with the technology.
Last week, it was announced that the consortium of banks would create what is being called the utility settlement coin. Plans are for the coin to be used to allow financial players, like traders, to settle securities transactions of all kinds, regardless of whether their denominations are in different currencies. The need for a money transfer would be no more, thanks to the technology of Blockchain.
Specifically, these players will be able to pay each other or buy securities like stocks and bonds, and not have to deal with the wait times that usually come with money transfers.
Spearheading the effort is UBS. Other banks are Barclays, Credit Suisse, Canadian Imperial Bank of Commerce, HSBC, MUFG and State Street. They are joining Deutsche Bank, Banco Santander, BNY Mellon and NEX, which have already signed up to use the coins.
Hyder Jaffrey, UBS’s head of strategic investment and Fintech innovation,” said the firms had been working on this project for some time.
“We have been in discussions with central banks and regulators and we will continue that over the next 12 months with the aim of a limited ‘go live’ at the back end of 2018,” Jaffrey said.
The idea for the utility settlement coin comes from Clearmatics Technologies.
According to ZeroHedge, these coins will mainly be used for interbank payments at first. The finance publication noted that the banks could settle those payments in utility coin instead of routing payments through an interbank broker.
This could be bad for human currency traders, notes ZeroHedge, because there will be fewer trades for them to execute.
No matter, for these participating, as well as the cryptocurrency space, the entry of these reputable banks is a good thing. It establishes more credibility, and highlights the trust Blockchain has established.
We’ll soon find out if this unified effort to give financial markets more ways to conduct transactions faster and efficiently will work. The goal is to begin testing it by the end of next year.