One of the most anticipated blockchain projects is in the works, with a number of banks set for a merger to launch a digital currency; following four years (2015) of research into uses of crypto technology.
According to a report by Wall Street Journal, the project is led by Swiss bank – UBS and 13 other major banks in the US, Europe and Japan; who have created a new company (Fnality International) to lead the digital currency development initiative.
The banks are said to have invested about $63.1 million into the project which aims to allow banks settle international/cross-border trades instantly; by lowering cost and faster transactions with no intermediaries.
Notable banks on the project include: Barclay’s of Europe and United States’ State Street, Japan’s MUFG Bank and Sumitomo Mitsui Banking Corp, Switzerland’s UBS and Credit Suisse, ING, CIBC (Canada), Santander (Spain), BNY Mellon among others.
Technical details reveal that the blockchain digital currency dubbed “Utility Settlement Coin (USC)”; will serve as a token for payment and a messenger that carries all the information required to complete a trade.
USC would be backed by bank-owned fiat currency held in central bank accounts; a move which they believe will tackle issues of price fluctuations.
The project is expected to be fully operational within a year.
Banks and Blockchain Digital Currencies
More banks have continued to express interest with regards to blockchain digital currencies and CBDCs for cross-border payments.
Ripple (XRP token) developers have focused their efforts on this niche through its xRapid product which is currently used by several financial service providers globally.
It will be recalled that major US bank JP Morgan had also launched its JPM Coin; though currently used internally for inter/intra bank settlements.
Similarly, this proposed ‘Utility Settlement Coin’ could also be an internal product, one with a focus on increasing banking efficiencies and not necessarily a decentralized public cryptocurrency like Bitcoin.
In all, blockchain digital currencies aim to basically improve the current cross-border payments system by eliminating costs and lengthy processes involving third-party intermediaries on the foreign exchange market.
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