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USB Group AG, a Swiss multi-national investment bank and financial services company, will be using its own digital currency for cross-border payment settlements. A report published by MarketWatch stated that a total of fourteen firms have developed a coin named, Utility Settlement Coin [USC], and among those firms includes leading banks of the United States, Europe, and Japan. The digital currency would be backed by “bank-owned currency held at the central bank.”
The project includes prominent industry players such as Barclays, Nasdaq, Bank of New York Mellon Corp., Canadian Imperial Bank of Commerce, Banco Santander, Lloyds Banking Group, Mitsubishi UFJ Financial Group, Sumitomo Mitsui Banking Corp., Credit Suisse Group AG, ING Groep NV, State Street Bank & Trust Co., Commerzbank AG, and KBC Group NV.
Notably, a total of $63.2 million has been invested in Fnality investment and it took the firm over four years for the development of the virtual currency. More so, the firm has been working with regulatory bodies of different countries in order to obtain the necessary regulatory documents.
The head of strategic investment at UBS, Hyder Jaffrey stated,
“You remove settlement risk, the counterparty risk, the market risk. All of those risks add up to cost and inefficiencies in the marketplace.”
The report stated,
“The USC token would function both as a payment device and messenger that carries all the information required to complete a trade, potentially cutting down on a transaction’s time and cost.
Interestingly, Brad Garlinghouse, the CEO of Ripple had spoken about this utility coin in a blog post on LinkedIn in August 2016. Garlinghouse had highlighted two major problems with a bank-issued digital currency, one among them being the coin backed by a “basket of currencies”. Garlinghouse had stated,
“Once backed by cash, it’s no longer an asset; it’s a liability. Trading liabilities then ultimately requires moving cash across borders, re-creating today’s system but adding more friction! We strongly believe banks need an independent digital asset to enable truly efficient settlement and we believe XRP is best positioned for that role.”
John Whelan, Head of Digital Investment Banking at Banco Santander, stated on Twitter,
“Stablecoin for wholesale purposes. After 3 years of R&D, Utility Settlement Coin becomes Fnality International.”