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24/08/2016

Santander and other companies join forces to advance the use of digital cash among financial institutions

  • Santander, UBS, BNY Mellon and Deutsche Bank join market operator ICAP and start-up company Clearmatics in developing the Utility Settlement Coin (USC) concept.

Madrid, 24 August 2016. Banco Santander has announced today that it has partnered up with other banks on a venture that aims to explore and advance the use of digital cash among financial institutions and with central banks. Alongside Santander, banks UBS, BNY Mellon and Deutsche Bank, market operator ICAP and start-up company Clearmatics are set to develop the Utility Settlement Coin (USC) concept. Once up and running, the system will allow for efficient, swift and secure payments and settlements.

What is truly innovative about this project is the fact that it relies on blockchain, the technology behind various cryptocurrencies such as bitcoin, to represent and enable transactions of real-world assets such as euros or dollars. The USC will therefore be a "currency" that exists within a distributed ledger, forming a chain of transaction blocks (hence the name "blockchain"). This ledger is shared by a large number of financial institutions, making it extremely secure, and represents money in digital format backed by a real-world asset. Therefore, a USC is convertible at parity with a bank deposit in the corresponding currency, meaning it can be exchanged between banks, and spending a USC means spending its paired real-world currency.

Julio Faura, head of Blockchain R&D at Santander, had the following words to say: “Recent discussion of digital currencies by central banks and regulators has confirmed their huge potential significance. The USC is an essential step towards a future financial market based on distributed ledger technologies”.

Active dialogue with central banks and regulators will continue to ensure a regulation-compliant, robust and efficient structure within which the USC can be deployed. Digital cash is a core component of a future financial market based on blockchain; a technology that looks set to revolutionise the banking industry within a matter of years. There are already plans to test USC in a real-market environment.

UBS and Clearmatics launched the concept in September 2015 to validate the potential benefits of USC for capital efficiency, settlement and systemic risk reduction in global financial markets. 

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