Some of the largest banks in the world have collaborated to develop what will be an entirely new cryptocurrency, according to a report on Futurism.com.
The group creating the new digital currency – the “utility settlement coin” – includes Barclays, Credit Suisse, Canadian Imperial, HSBC, MEFG, and State Street.
These banks will join several other banks which are already part of the project.
Banks have been studying digital currencies for some time, and have been looking into blockchain, the underlying technology for cryptocurrencies.
Blockchain is a distributed ledger which does not require a central bank, which is obviously fundamentally different to the way conventional or traditional banks do business.
Traditionally, a bank’s assets and liabilities are effectively guaranteed by its host country. So, in the UK, all banks are essentially underwritten by the Bank of England, traditionally called the lender of last resort.
This means that if any of the banks go bankrupt or have some problems, the Bank of England can resolve the issue.
With blockchain and cryptocurrencies, however, no one knows who would be responsible if there are problems with one of the currencies or any part of the system.
This is why some countries have banned cryptocurrencies and there is still widespread scepticism of them.
But the growth of cryptocurrencies has been such that it can no longer be ignored and some countries are even considering launching their own digital currencies.
Russia, Japan and Estonia are among the countries which have been receptive to the idea of cryptocurrencies. The UK and US are apparently looking into blockchain, but there has been no categoric backing of blockchain technology and its associated digital currencies.
China, meanwhile, recently banned companies from raising money through what are called “initial coin offerings”, or ICOs.
The authorities in China have been warning of fraud and other risks surrounding ICOs and related financial products.