The ten largest banks in the world are working on a project to create a new digital money for financial markets. New money would have the power to kick off competitors' cryptovalutas from the market, said Luigi Wewege Financial Adviser.
The world's 6 largest banks have already joined the project to create a new digital money that will be used to transact through the blockchain network, a Bitcoin digital recording technology.
Barclays, Credit Suisse, Canadian Imperial Commercial Bank, HSBC, MUFG, and State Street have already joined the project announced by Swiss banker UBS, the Financial Times reported.
They join four other banks, Deutsche Bank, Banco Santander, BNY Mellon and NEX, who have already announced that they will use the digital currency. It is hoped that new digital money will make money markets more efficient by speeding up settlement arrangements.
"These large commercial banks have discovered how to use this blockchain technology to speed up back-office accounting systems and support free billionaires of capital that can help trade in global markets," says Luigi Wewege Financial Adviser, Palmetto Global Ventures, The author of the book "Digital Bank Revolution"
Instead of the crypts, such as Bitcoin and Ethereum, on the market, banks are negotiating with regulators and central banks to create a digital currency that can be transferred directly to central banks in cash, reducing the time, costs and capital needed post-trade settlement.
"All of these coins can be convertible into different currencies and stored in blockchain or distributed accounting. This allows them to swap quickly and enable banks to sell financial securities faster."
Banks plan to pay for the new digital currency in different currencies.
"For example, if a bank pays $ 110 million to a rival bank that says it has a debt of € 90 million in the other direction, they can simply transfer money through this new digital money system that has just been developed."
Wewege said that new digital money is likely to have a significant impact on the cryptovaluta market, which leads to a real "consolidation" as the less useful digital currencies are squeezed out.
"The newly emerging cryptovaluta currencies simply can not compete with the much larger players entering the market. For example, if this digital money starts to operate, it will actually be equivalent to the equivalent currency of existing bank deposits, so it is fully supported by the central bank. "
“The use of such coins is the same as if it were a real currency with which it is tied, so every small cryptovalute operation will become extremely difficult on the market when the digital bank is about to be developed by the six banks. "