Daily Management Review

Consortium of Banks Plans To Invest Nearly ‘$50 million’ In Ambitious ‘Digital Cash System’


This time, banks have taken the central banks and regulators on board to ensure that their digital cash has an equivalent value with fiat currency.

Many of largest banks across the world are gearing up to invest an amount of nearly “$50 million” in creating “a digital cash system” which would use the “blockchain technology” for financial transactions, revealed sources “familiar with the plans”.
Earlier in 2015, the project titled “utility settlement coin” was proposed by the “Swiss bank UBS Group AG and London-based technology startup Clearmatics”, whereby it wanted to create a “more efficient” system for “clearing and settlement in financial markets”. It is reported that around twelve banks are going to invest in the new venture named “Fnality”, which would be running the project.
However, upon finalisation of the deal various details may undergo further change, while the new system could be expected to be launched in the year 2020, revealed the sources to Reuters. Nevertheless, the names of the banks who are taking part in the “investment round” still remain unclear.
On the other hand, the banks that had reportedly worked on the “earlier phases of the project” include “UBS, Banco Santander, Bank of New York Mellon Corp, State Street Corp, Credit Suisse Group AG, Barclays PLC, HSBC Holdings Plc and Deutsche Bank AG”. In a written statement, a spokesperson from Barclays said:
“We are a member of the USC Project and can confirm that the Research & Development phase is coming to an end”.
No other comments were made by other banks.
Many financial establishments including banks have invested a thick sum in testing “new blockchain systems”, as its “shared ledger of transactions” aims at cutting down “costs and complexity of cumbersome processes” such involved in “securities settlement and international payments”.
The “utility settlement coin” project happens to be among the “most ambitious” ones featuring “digital cash instrument” for the banks to settle transactions. The coin, a digital cash, would have an equivalent value of “central bank-backed currencies” which would be used in “blockchain-based technology”. Similarly, it could be converted or even be “backed by cash assets held at a central bank”. Therefore, spending the coin would mean spending equivalent amount of the “fiat currency it is paired with”.
Earlier, it was reported that consortium of banks were discussing with the central banks as well as the regulators to ensure compliance in structuring the project.