Topic: [2016-08-31] 'Settlement Coin' is All About Banks, Not Blockchain (Read 259 times)
Seems the banks have decided to take matter into their own hands. I wonder if other banks will agree to method of doing business, let's see how everything will unfold.
August 31, 2016, 01:33:24 AM
Why would anyone want to use a coin issued by four large banks bailed out in 2008?
That's a question that many are asking after UBS, Deutsche Bank, Santander, BNY Mellon and ICAP announced last week that they had teamed up with blockchain developer Clearmatics to create a new digital currency. In a joint press release, the new consortium said that the "Utility Settlement Coin" would be used to clear and settle financial market trades on a blockchain.
But while it would be easy to see this as an alternative means of settlement using a private currency owned, issued and backstopped by the members of the consortium, that's not what the consortium is planning.
From the press release, here is Clearmatics CEO, Robert Sams:
"Cash is a leg to almost every trade, so this project is key to unlocking the benefits that the industry can gain from distributed automation technology in clearing, settlement and collateral management."
This explanation is less than clear, so let me translate. The consortium aims to speed up central bank settlement processes and reduce the need for banks to maintain expensive collateral to meet short-term liquidity needs in real-world currencies, so that banks can increase the frequency of trading and make better use of capital.
Instead of waiting to receive real-world currency via a central bank real-time gross settlement (RTGS) systems, banks could simply issue Utilities Settlement Coins to meet their obligations and carry on trading.
Of course, as Hyman Minsky said: "Anyone can create a currency, the problem is getting others to accept it."
Not so ambitious
Why would other market participants accept a coin magicked into existence by a large bank in final settlement of an obligation in real-world currency? Well, they wouldn't, of course – unless the coin was issued and backstopped by a central bank.
So, the consortium proclaims that the new coin will be CENTRAL BANK money.
http://www.coindesk.com/utilities-settlement-all-about-banks-not-blockchain/
That's a question that many are asking after UBS, Deutsche Bank, Santander, BNY Mellon and ICAP announced last week that they had teamed up with blockchain developer Clearmatics to create a new digital currency. In a joint press release, the new consortium said that the "Utility Settlement Coin" would be used to clear and settle financial market trades on a blockchain.
But while it would be easy to see this as an alternative means of settlement using a private currency owned, issued and backstopped by the members of the consortium, that's not what the consortium is planning.
From the press release, here is Clearmatics CEO, Robert Sams:
"Cash is a leg to almost every trade, so this project is key to unlocking the benefits that the industry can gain from distributed automation technology in clearing, settlement and collateral management."
This explanation is less than clear, so let me translate. The consortium aims to speed up central bank settlement processes and reduce the need for banks to maintain expensive collateral to meet short-term liquidity needs in real-world currencies, so that banks can increase the frequency of trading and make better use of capital.
Instead of waiting to receive real-world currency via a central bank real-time gross settlement (RTGS) systems, banks could simply issue Utilities Settlement Coins to meet their obligations and carry on trading.
Of course, as Hyman Minsky said: "Anyone can create a currency, the problem is getting others to accept it."
Not so ambitious
Why would other market participants accept a coin magicked into existence by a large bank in final settlement of an obligation in real-world currency? Well, they wouldn't, of course – unless the coin was issued and backstopped by a central bank.
So, the consortium proclaims that the new coin will be CENTRAL BANK money.
http://www.coindesk.com/utilities-settlement-all-about-banks-not-blockchain/
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