Six banks are experimenting with blockchain currencies

Six banks have joined a new project by Swiss bank UBS to develop a blockchain-based digital currencyTo be put into circulation. Barclays, Credit Suisse, HSBC, as well as smaller banks such as the Canadian Imperial Bank of Commerce, MUFG and State Street are participating in the development of the so-called 'utility settlement coin' (USC).

The USC will be directly redeemable for balances in the official currency at all affiliated banks. This new virtual currency should be launched at the end of 2018, the head of UBS's fin-tech department told the Financial Times.

The Swiss bank first presented the concept in September 2015, when it was in collaboration with the blockchain company Clearmatics and with other banks such as Deutsche Bank and Santander. But now that more banks are participating, the initiative seems to have a better chance of success.

With this new currency based on blockchain technology, customers of the participating banks can make payments directly and without delay, balances that the banks exchange for real money on a one-to-one basis.

Virtual currency

With this new virtual currency based on blockchain technology, banks are also entering the world of Bitcoin, Ethereum and Litecoin. What makes this technology special is that there is no central point where all transactions are processed, because all transactions are validated within the network itself. A blockchain-based money system therefore makes it possible to make payments directly, without the intervention of a bank.

If UBS's experiment is a success, the new virtual currency could be implemented by more banks. However, UBS is not the only bank working on this technology, as central banks are also exploring the possibilities of money based on blockchain technology.

Banks to use blockchain technology