> "Each settlement coin would represent fiat currency like euros and dollars on a one-to-one basis, and would thus be 100% backed by collateral at the domestic

> "Each settlement coin would represent fiat currency like euros and dollars on a one-to-one basis, and would thus be 100% backed by collateral at the domestic central bank, according to UBS. The idea is that exchanging the digital currency as payment for assets will be a more efficient means of exchange. Because the digital coins will be backed by cash at a central bank, which cannot default (they can always print money if they have to), the crypto tokens are free from credit risk. UBS says transfers and ownership could be settled instantly—the promise of blockchain technology." Can someone explain how this could work? Suppose on day-1, UBS has US$100M, and wants to transfer that over to HSBC. I'm guessing they are going to: 1. Create a brand new set of crypto-tokens representing US$100M 2. Send the crypto-token over to HSBC electronically 3. HSBC can then pass the crypto-tokens onto whoever they have dealings with 4. Eventually, someone is left holding the crypto-token and wants to redeem it for actual USD 5. That person/entity would then go to UBS, hand over the crypto-token in exchange for USD, with the trust that UBS will honor that request? How is this any different from a bank issuing a IOU? Without voters/governments deciding to back UBS idea, how is the nation's central bank going to figure into this scheme?