Watch out, Bitcoin! Wall Street is gunning for you.
Swiss bank UBS is leading a team of four of the world’s biggest banks developing a system to enable financial markets to make payments and settle transactions quickly using blockchain technology.
UBS has developed a “Utility Settlement Coin” (USC), which is a digital cash equivalent of each of the major currencies backed by central banks, such as the dollar or euro, rather than a decentralized new digital currency such as bitcoin.
The USC would be convertible at parity with a bank deposit in the corresponding currency, making it fully backed by cash assets at a central bank. Spending a USC would be the same as spending the real currency it is paired with, UBS said.
Blockchain projects such as this have the potential to shake up the settlement system used by banks, under which transactions can take several days to finalize and which costs the financial industry $65 billion to $80 billion a year, according to an Oliver Wyman report last year.
“Digital cash is a core component of a future financial market fabric based on blockchain technologies,” UBS Investment Bank’s head of fintech innovation Hyder Jaffrey said.
The Swiss bank first launched the concept in