Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Major bank-led digital cash settlement project gets delayed

Published 09/09/2020, 13:23
Updated 09/09/2020, 13:25
© Reuters.
BARC
-
CSGN
-
SAN
-
META
-
UBSG
-

By Anna Irrera

LONDON (Reuters) - A project involving 13 of the world's largest banks and aimed at launching digital versions of major currencies in 2020 is no longer likely to get going this year, the company set up to run the effort said.

Technological development work on the previously named "Utility Settlement Coin" initiative has progressed, but it still needs regulatory approval, said Fnality International Chief Executive Rhomaios Ram. It hopes to receive that approval by the first quarter of 2021, he said.

Initially spearheaded by UBS Group AG (S:UBSG), the project has been in the works for more than five years and seeks to create a more efficient way for banks to settle financial transactions.

In June 2019 banks including Barclays Plc (L:BARC), Banco Santander (MC:SAN) and Credit Suisse Group AG (S:CSGN) announced the creation of Fnality, investing £50 million into the venture. The company had said it expected the project to be commercialized by 2020.

The banks declined to comment.

The project is looking to replace some of the cumbersome processes and paperwork involved in transferring value between financial organizations by using digital versions of the dollar, yen, euro, sterling and the Canadian dollar.

The venture is one of several high profile efforts by banks and other large financial companies to use blockchain, the technology underpinning cryptocurrencies, to streamline operations and lower costs.

While the sector has spent millions of dollars on experiments and tests, only a few projects have had a significant impact and many are taking longer than expected.

In many cases the technology has been built but projects have been delayed because of regulatory or operational hurdles. In other instances projects have failed or have been abandoned because they did not get widely adopted after being launched.

"The technology is the least complicated part of this whole thing," said Ram.

Other companies have been seeking to launch blockchain-based systems to carry out payments.

In June 2019, Facebook Inc (O:FB) announced it was leading the creation of a digital currency called Libra. The project has faced significant regulatory pushback globally and has since been delayed and reshaped.

Last week, Bank of England Governor Andrew Bailey said that if so-called stablecoins are to be used widely there must be equivalent regulatory standards to those in place for existing forms of payment.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.