The “utility settlement coin” (USC) is asset-backed digital cash that aims to allow financial institutions to trade securities without one another but without having to wait for traditional money transfers to be completed. Instead, they would send and receive digital tokens that are convertible into fiat currency at the central banks.
What is utility settlement coin?
The Utility Settlement Coin initiative will tokenise fiat currencies on an Ethereum-based blockchain addressing the ‘cash on a ledger’ problem and potentially transforming the post-trade process, and , most importantly, banks are throwing their money behind it.
Can you do this enterprise stuff without having cash on the ledger?
As one source added: “You can’t do this enterprise stuff without having cash on the ledger.”
Is USC commercial money?
By taking a collaborative route, USC could enable instantaneous settlement, along with removing counterparty risk. Despite the USC being commercial money, it will have the characteristics of central bank money. The central bank element is interesting and crucial to the project as is the interoperability element, servicing different types of business, plugging into any form of exchange.
