Big Banks Collaborate on New Digital Currency for Settlements

               The news follows the long-awaited publication of the World Economic Forum’s look at how blockchain can reshape the future of our financial services infrastructure. Among its many findings, it stresses the need for ‘deep collaboration between incumbents, innovators and regulators’. It is encouraging therefore to see the emergence of this new consortium and its subsequent engagement with central banks.

Intro Of Block Chain Technology:- 

The blockchain is seen as the main technological innovation of Bitcoin, since it stands as proof of all the transactions on the network. A block is the 'current' part of block chain which records some or all of the recent transactions, and once completed goes into the block chain as permanent database. 

Time will tell what industry standards emerge for digital cash systems, as several others are being developed. CitiGroup’s ‘Citycoin’, Goldman Sachs' ‘SETLcoin’ and SETL, a London based institutional payment and settlement infrastructure based on distributed ledger technology, all offer alternatives. The technology may well experience its own ‘VHS/Betamax’ moment as the market coalesces around one system. Industry standards will be required in order to ensure interoperability across different propriety systems, geographies and asset classes. Existing standards in financial services, around payments, securities trading and settlement and trade finance may well have to be revised. Despite the hype surrounding blockchain, debate does remain however as to whether it is the best model to employ in this field and whether central banks will approve the proposal for settlements.

In response to the news, Hyder Jaffrey, Head of Fintech Innovation at UBS remarked:
“You need a form of digital cash on the distributed ledger in order to get maximum benefit from these technologies. What that allows us to do is to take away the time these processes take, such as waiting for payment to arrive. That frees up capital trapped during the process.”

On the other hand, Founder of UK digital currency, LEOcoin, and Chairman of the LEOcoin Foundation, Dan Andersson, welcomed the financial sector’s recognition of the value of block chain technology, but expressed serious concern that the move could see the world’s biggest banks attempt to “hijack” the sector and crowd out those working in disruptive finance technology.

“I am obviously pleased to see the financial world wake up to the value of digital currency, even if they are late to the party. It is clearly a good thing for this technology to no longer be treated as a financial pariah reserved for those with malicious intent. It has the potential to link up businesses and entrepreneurs on a global scale, and at the LEOcoin Foundation that is what we are trying to do.

“However, I am concerned that the ‘big banking’ sector’s centralising inclination may cause them to hijack and stifle blockchain and digital currency technologies to crowd out disruptive entries. If banks simply use digital currencies to do more of the same they will have missed the point of this revolutionary opportunity.”

Following the publication of techUK’s whitepaper focused on the industrialization of distributed ledger technology in financial services, authored by members TCS, techUK will be soon convening the first meeting of its DLT working group. Keep an eye out for associated activities in the remainder of the year.

Reference:- http://www.techuk.org/insights/news/item/9209-big-banks-collaboration?utm_content=buffer950d4&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer