UBS is leading a team of banks developing a system to allow financial market participants to make payments and settle transactions quickly using blockchain technology.

The Swiss bank, along with BNY Mellon, Deutsche Bank, Santander and brokerage ICAP, has developed a "Utility Settlement Coin" - a digital cash equivalent of each of the major currencies backed by central banks, rather than a decentralised new digital currency such as bitcoin.

"Digital cash is a core component of a future financial market fabric based on blockchain technologies," said Hyder Jaffrey, head of strategic investment & fintech innovation at UBS Investment Bank.

"There are several digital cash models being explored across the Street. The Utility Settlement Coin is focused on facilitating a new model for digital central bank cash."

Tech firm Clearmatics is delivering early releases of the platform to underpin the concept. Dialogue with central banks and regulators will continue throughout the build, UBS added.

"Cash is a leg to almost every trade, so this project is key to unlocking the benefits that the industry can gain from distributed automation technology in clearing, settlement and collateral management,” said Robert Sams, founder and chief executive of Clearmatics Technologies.

Paul Maley, managing director, institutional client group, Deutsche Bank, added:  "As today's settlement and clearing is a process involving many institutions, it's vital that we collaborate with our peers to develop viable alternatives to current models, creating new digital capabilities for the financial services industry."