Big banks plan to coin new digital currency

SpacePete · Aug 25, 2016

Is this a step towards wider official adoption?

Four of the world's biggest banks have teamed up to develop a new form of digital cash that they believe will become an industry standard to clear and settle financial trades over blockchain, the technology underpinning bitcoin.

UBS, the Swiss bank, pioneered the "utility settlement coin" and has now joined forces with Deutsche Bank, Santander and BNY Mellon as well as the broker ICAP to pitch the idea to central banks, aiming for its first commercial launch by early 2018.

The move, to be announced on Wednesday, is one of the most concrete examples of banks co-operating on a specific blockchain technology to harness the power of decentralised computer networks and improve the efficiency of financial market plumbing.

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The utility settlement coin, based on a solution developed by Clearmatics Technologies, aims to let financial institutions pay for securities, such as bonds and equities, without waiting for traditional money transfers to be completed. Instead they would use digital coins that are directly convertible into cash at central banks, cutting the time and cost of post-trade settlement and clearing.

The coins, each convertible into different currencies, would be stored using the blockchain, or distributed ledger technology, allowing them to be quickly swapped for the financial securities being traded.

"You need a form of digital cash on the distributed ledger in order to get maximum benefit from these technologies," said Hyder Jaffrey, head of fintech innovation at UBS. "What that allows us to do is to take away the time these processes take, such as waiting for payment to arrive. That frees up capital trapped during the process."

He said the project team would spend the next year seeking the approval and co-operation of regulators and central banks and aim for a "limited and low-risk" commercial launch by early 2018. The consortium members plan to argue that the system would improve transparency for regulators.

The US Federal Reserve, the Bank of England and the Bank of Canada are among central banks examining the potential benefits of digital currencies. But concerns include the security and the impact on banking stability.

http://www.cnbc.com/2016/08/24/big-banks-plan-to-coin-new-digital-currency.html
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SpacePete · Aug 25, 2016

Or maybe not:

UBS And Other Banks Are Not Creating A New Digital Currency - It's Blockchain Settlement Not Money

UBS and other banks have announced that they're hoping to develop and roll out a new blockchain related development to aid in the settlement of financial trades. Some are very much getting the wrong end of this stick and arguing that this is a new currency and that there will be all sorts of tax and money laundering implications to this. No, it's simply a way of being able to move settlement of financial trades from the current T+2 and T+3 systems over to one where trades are settled immediately. It's really nothing at all to do with money, it's the blockchain which is important.

It's also worth pointing out that this is the part of the Bitcoin technology which people (including myself) have been saying might well be useful. Other than Bitcoin itself that is, which really isn't all that useful as an addition to anything. Being able to record, instantly and unbreakably, the ownership of assets, the transfer of assets, is indeed useful and is what is being used here.

http://www.forbes.com/sites/timwors...blockchain-settlement-not-money/#5b666aff2070
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Big banks plan to coin new digital currency

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