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UBS wins big bank backing for Utility Settlement Coin concept

24 August 2016  |  10351 views  |  0 Numbers

BNY Mellon, Deutsche Bank, Icap and Santander have joined with UBS and Clearmatics to advance the Utility Settlement Coin, an asset-backed digital cash instrument implemented on distributed ledger technology.

UBS and Clearmatics floated the model in September 2015 to validate the potential benefits of USC for capital efficiency, settlement and systemic risk reduction and as a harbinger for central bank backed digital cash issuance. The virtual coin acts as a proxy for physical currency assets held in deposit at the central bank.

The project was initially incubated as part of the UBS Crypto 2.0 Pathfinder Program, the Swiss bank's R&D blockchain lab.

"Digital cash is a core component of a future financial market fabric based on blockchain technologies," says Hyder Jaffrey, head of UBS strategic investment & fintech innovation. "There are several digital cash models being explored across the Street. The Utility Settlement Coin is focussed on facilitating a new model for digital central bank cash."

The USC concept will be developed through a series of short iterative phases and platform deployments, he says. Clearmatics has been tasked with delivering early releases of the technology platform underpinning the model, while the bank backers engage with central banks and regulators on progress.

Julio Faura, head of R&D at Santander, comments: "Recent discussion of digital currencies by central banks and regulators has confirmed their potential significance. The USC is an essential step towards a future financial market on distributed ledger technologies."

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