Major World Banks Team Up To Create Digital Currency: Utility Settlement Coin!

in cryptocurrency •  2 years ago


Cryptocurrency and Blockchain Technology are the future of finance - of course, no one knows that better than we steemians do.

But although the benefits are so obvious, traditional banks are still very hesitant about the concept of digital currency - and not only hesitant, some are even fighting it completely.
And of course this behaviour is no surprise because the decentralized cryptocurrencies would effectively disrupt the banking system as we know it.

But now, it seems like we are witnessing the first step that banks take towards digital currency and blockchain technology:

Yesterday, a group of major global banks decided to team up to create a new digital currency!

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The new digital currency is nicknamed "utility settlement coin", and was formed by swiss financial services company UBS in 2015.

Since then, major banking institutions like Barclays, Deutsche Bank, Credit Suisse, Canadian Imperial Bank of Commerce, Santander, BNY Mellon, HSBC, MUFG, State Street and more have joined.

"Digital cash is a core component of a future financial market fabric based on blockchain technologies. 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. It may well inform the way central banks choose to move things forward. We see it as a stepping stone to a future where central banks issue their own [cryptocurrency] at some point."

-Hyder Jaffrey, head of Strategic Investment & FinTech Innovation at UBS Investment Bank


What is the Utility Settlement Coin (USC) about ?

First of all: this will not be a regular cryptocurrency like Bitcoin or Ethereum.
The currency doesn't hold value itself - it's a digital representation of cash, meant to simplify the banking process by allowing transactions to be credited in a matter of minutes/hours, instead of a matter of days.
'So what's the point then?!' you might think. But the point is that the banks need to create this digital token as a tool to integrate blockchain technology into their current system.
This way, they can conduct a wide variety of transactions with each other using collateralized assets on a custom-built blockchain.
Financial groups would be enabled to pay each other, for example to buy bonds and equities, without having to wait for regular money transfers.
The digital tokens would be directly convertible into cash at central banks, therefore reducing the cost and time required for traditional post-trade settlement and clearing.

“The USC is an essential step towards a future financial market on distributed ledger technologies. It provides an exciting opportunity to work closely with other industry thought leaders and the regulatory community to explore the possibilities of this technology.”

-Saket Sharma, head of Treasury Services Technology at BNY Mellon


What's next?

The USC initiative is still in development.
Right now, the project has started the 3rd phase in which they begin to test a formal transfer of ownership and an accurate cash equivalents definition for the transfer. This way, they can imitate what the real process for transactions between members would be like.
During these tests, the collateralized token will be given directly to the asset owner, and does not have to go through the traditional process of banking transactions.
This 3rd phase is expected to go on for about a year.

Then, at the end of 2018, the initiative will likely go live!

According to Jaffrey from USB, this could also be the point where the first live collateralized token exchange using the platform launches.
From then on, he could see banks using the utility settlement coin to pay other banks in different currencies and conduct transfers almost instantly.
Before the USC tokens could also be used to settle securities trades, the securities themselves need to be transferred to a system based on blockchain technology as well. Otherwise, the gained benefits of speed and reduced capital requirements will be lost.


So in conclusion:

The USC is the first steps for banks to finally recognize and implement the power of blockchain technology.
It will first be a means for financial institutions to transfer funds without having to wait several days, and will launch in about 1 year.
We'll see how this project develops and if more banks will join in the future!


What's your opinion about banks stepping into the digital currency space?




Images: 1, 2, 3, 4, Sources: 1, 2, 3, 4, 5, 6



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Interesting and about time. How do you think this impacts Ripple?

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I've wondered the same thing... I'd love to know what the ripple team is thinking about this.
Well first of all since the USC isn't out until 2018 ripple still has a big advantage, but of course these banks are much more powerful than ripple itself.

Where is Ripple going then?

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Ripple will be Crippled, these banks are 10 times bigger than the ones behind XRP!
Good info to start a deeper investigation! As banks sit on most of the dough in the world, they are heavily influential. We can never ignore them. They just need to stop acting as banks of today and evolve! XRP is just scratching the surfice, this is taking it a notch further!

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LOL! Couldn't agree more.

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... true!
I'm interested to see how ripple will develop under these circumstances!

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I think Ripple will continue to develop and make progress. There is room for everyone.

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Yeah...but I agree with @the-cv-trickster Ripple will be cripple in terms of their current market cap.

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If you take a look at the events of the past week, and the crash in prices suffered by most coins, Ripple actually proved to be remarkably stable and to be largely untouched. So, I would not be so sure...

I don't think Ripple will ever make you millions or that its price will suddenly skyrocket 1000%, but it is fast, efficient, cost-effective and stable. Key points which make it way more usable than Bitcoin or even Ethereum.

I would think that if people that are buying crypto just stick to the coins that are existing, and hopefully they won't use the bank coins. People have the choice. Choose not to support the big banks. Of course then they force it with government regulation then. I like crypto because I am not a fan of big banks and regulations. Thank you for the post.

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Great article. The beauty of bitcoin & litecoin IS decentralization. It's just a matter of time before these big banks enter the scene but isn't the entire crypto space trying to get away from these guys?

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exactly. some people even call the USC the "anti-bitcoin". My mind is kind of torn about it too.

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Max Keiser just re tweeted this

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Thank you!
And yes, the key to cryptocurrency IS decentralization and independance from banks. But at least this project shows that banks are recognizing the benefits of blockchain technology now.

I thought banks were on it for quite awhile now trying to integrate into the crypto world and have their own thing on the market. It was to be expected. They will probably just keep popping up.

Interesting

Banks will sit on the fence and allow others to take over the financial sector via blockchain technology however we the people still have to chose on which one to proceed with and we have to reject the banks if we want to be free and successful , upped...

Wait for the FED Coin issued by the government many years down the road :( lol

Damn we dont need anpther system created by banks. Lets use our "own" cryptocurrencys

There is also CORDA, a blockchain inspired digital ledger tech built from scratch to serve the big banks. USC is definitely not the first. Nevertheless; banks interest in the blockchain technology furthee shows its importance.

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Interesting, I didn't know about CORDA!

I'd change the title to "Banks are so butt hurt about not being able to control crypto that they decided to create their own"

i am glad they are only solving half the puzzle as their coin has been tied to dollar value- if it was a true crypto like bitcoin i would be wanting to buy it- as it is , i think bitcoin is safe as it has value and limited supply. Thanks for this info, it is worth considering and we need to be careful, new laws are the biggest danger to crypto now.

The last time I checked, which was a few years ago. Only about 15% of USD was actual physical currency in circulation. The other 85% is on the books at all the banks. So they are close to a digital already.
This is a very interesting subject that has been brought up here. Looking forward to more info from more people. Thanks for the post!! STEEM ON!!

Your information is very useful! I've learned more from your post: D I'm looking forward to your next post!

Thanks for the infos. Upvoted and reateemed your,post. :-)

Excellent post @sirwinchester, I agree with what you write, it's very interesting, thanks for sharing that information , I follow you, we must support ourselves as a community, I appreciate it if you I would give me a look at my last post and give me your opinion, greetings and success in everything.

Those kids never rests!

buen contenido , me gusto la informacion y da la idea que bicoint subira al cielo, buen post

Today we dont predict anything yet, we have to

there is no doubt that--- Cryptocurrency and Blockchain Technology are the future of finance

Probably will not be successful since the token needs pay the network for the infrastructure and security. Fiat can just be tokenized as a ERC-20 token so the first thing from the banks will be likely be crypto cash. They could run this on any smart contracts platform like ETH, NEO, EOS - three prime examples. The blockchain will decentralize everything. I think a good example is bank apps like Everex.io or OMG of how future banking will be built on top of the public blockchains. Just ask Mike Hern and the R3 bank chain.

cryptocurrencies are meant to replace banks. we don't want them to join us.

I think this is a very successful idea

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Well, then things are going down hill from now on, I assume. It had to be expected however.

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I'm not entirely sure how to feel about it either. But at least it shows that the benefits of blockchain technology can't be avoided and it gets more and more adapted.

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I suspect a different motivation behind that. Remember, the big banks don't need crypto currencies, blockchain and that stuff - they have established a system that works perfectly for them and their interests. Crypto has no benefits for them, its a threat because they cant control and manipulate it to their liking.
So there are only two options: to prohibit it (which is almost impossible) or to adopt it, in order to gain influence in the whole thing. I guess that's what this is about.

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That has not been determined yet.

Wow! Interesting. Let's see where it will go

Upvoted and resteemed