UBS Head Backs Blockchain… but Not Cryptocurrency
UBS CEO Sergio Ermotti has joined a growing list of big-name bankers to express public support for the blockchain, but not the pesky currency systems built on top of it.
Meet the Latest Backer of Blockchain
In an interview with CNBC on Thursday, Ermotti said he is “not necessarily a believer” in cryptocurrencies, but that his bank has been a player in blockchain project Batavia. The breakthrough digital ledger technology will allow financial institutions to “operate and transact at a cheaper, more efficient level.”
When asked whether he supported digital currencies, he said: “Not necessarily cryptocurrencies, I think that needs to be defined, but I believe there is a future for blockchain technology, and technology will play a big role in changing and reshaping our industry.”
The head of the Swiss banking giant isn’t the first to form a love-hate relationship with blockchain and its offspring. Regulators, financial institutions and even central banks have shown great affinity for blockchain, but haven’t admitted they were wrong about cryptocurrencies. Now, these and other stakeholders are wondering whether they should ban cryptocurrency all together.
Earlier this month, several banking giants joined UBS and IBM on the Batavia project. The list of participants now includes heavy-hitters like Commzerbank, Bank of Montreal, Erste Group Bank and CaixaBank.
Batavia is designed to help banks and their clients automate so-called trade finance operations, a paper-based process that funds importers and exporters. Batavia will help the banks monitor a transaction from when a shipment leaves a warehouse, boards a plan and arrives at its destination.
Trade finance remains highly convoluted in an era that demand efficiency. Fin-tech has certainly brought traditional finance light years ahead, but trade finance continues to be ugly. For instance, buyers, sellers and their financial backers still rely on paper-based documentation to facilitate secure trade transactions. This means buyers, sellers, banks, transportation services, inspectors and regulators are still using fax to communicate with one another.
The blockchain proposes to change all that by providing a permanent ledger for full transparency. With Batavia, parties can finally put their fax machines in the trash where they belong and instead access a shared version of a transaction.
And so continues the trend of “for blockchain, not bitcoin” that is currently sweeping the finance world.
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