Barclays, Credit Suisse, Canadian Imperial Bank of Commerce (CIBC), HSBC, MUFG and State Street have joined a consortium dedicated to producing a ‘utility settlement coin’ – a digital currency to handle cash transactions on a distributed ledger.
In contrast to cryptocurrencies like
Rather than having a fluctuating exchange rate with conventional fiat currencies, settlement coins will be fully
“This means there’s no effect on the money supply,” said Mike
While settlement coin could bring efficiency benefits, members of the consortium are keen to emphasise that it is intended to be “a foundation stone” for more advanced technology. Paul Maley, a managing director at Deutsche Bank, said: “Once we have the base layer – moving cash instantly – that enables the next stages of development.”
The new members of the consortium were selected to maximise the group’s global reach, allowing them to engage with regulators around the world. “The goal is to get global reach, allowing us to connect with regulators around the world,” said Maley. “That will inform our decision of where we eventually go live.”
The project is moving into its third phase.
While the settlement coin system is taking shape, technical challenges remain and a great deal of work will need to be done to get the infrastructure into a resilient enough state to handle the volumes involved.
Josh Klayman, chair of Morrison & Foerster’s blockchain and smart contracts group, said that with settlement coin, blockchain technology is coming almost full circle.