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World’s Biggest Banks Team-up to Develop Blockchain Settlement System

Wall Street's increasing focus on digital currency technology has been affirmed yet again with the recent teaming up of a group of financial giants for the development of Utility Settlement Coin (USC). It is a digital cash model based on blockchain that aims to facilitate payment and settlement for global institutional financial markets.

Swiss banking giant UBS Group AG and London-based Clearmatics initiated USC last September to validate the potential benefits of USC for capital efficiency, settlement and systemic risk reduction in global financial markets.  UBS, Deutsche Bank, Santander and BNY Mellon are looking to make clearing and settlement more efficient by coining a new digital currency backed by blockchain. The move is one of the most concrete examples of banks co-operating on a specific blockchain technology to harness the power of decentralized computer networks and improve the efficiency of financial market. Having initially been skeptical about it because of worries over fraud, banks are now exploring how they can exploit the technology to speed up back-office settlement systems and free billions in capital tied up supporting trades on global markets. According to a report last year by Oliver Wyman, the total cost to the finance industry of clearing and settling trades is estimated at US$65 billion - US$80 billion a year.

News Characteristics

Date : Aug 25, 2016
Region : North America
Industry : Banks
Function : Operations and IT
Sub-Function : IT Modernization/Transformation