Big banks create Utility Settlement Coin company

Big banks create Utility Settlement Coin company

Some of the world's biggest financial services firms - including Barclays, Nasdaq and UBS - have pumped £50 million into a new venture building a Utility Settlement Coin (USC), an asset-backed digital cash instrument implemented on distributed ledger technology.

The creation of the new company, called Fnality International, marks the commercial stage of a process that began in 2015 when UBS and tech firm Clearmatics floated the USC model for international cross-border payments.

The firm has been tasked with creating a regulated network of distributed Financial Market Infrastructures (dFMIs) to support global exchange of value transactions.

Initially, five currencies are in scope: CAD, EUR, GBP, JPY & USD. Fnality will create digital versions of each, which will be 100% backed by fiat currency held at the respective central bank with convertibility into fiat at par guaranteed at all times.

Its backers say that the USC reduces settlement risk, counterparty risk and ultimately system risk in the post-trade settlement process.

Rhomaios Ram, CEO, Fnality, says: "We are delighted to launch Fnality, the commercial realisation of the USC Project. Working with our founding shareholders, we will start the regulatory approval process right away and look forward to connecting to the first business applications as soon as possible

"USC will be an enabler for tokenised markets and also offers a significant opportunity to simplify liquidity management using one cash asset for as many settlement needs as possible."

Banco Santander, BNY Mellon, CIBC, Commerzbank, Credit Suisse, ING, KBC Group, Lloyds Banking Group, MUFG Bank, Sumitomo Mitsui Banking Corporation and State Street are all backing the new Fnality International operation.

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