Bank of Tokyo-Mitsubishi UFJ, the largest bank in Japan and the eighth largest in the world, has announced its intention to develop a digital currency on the basis of the blockchain technology.
The first information about the plans of Bank of Tokyo-Mitsubishi UFJ appeared in February. It was known that the new digital currency was to rely on a P2P system that uses smartphones to verify the existence of digital tokens.
MUFG Coin, the name of new bank’s currency, was taken from bank’s parent company, Mitsubishi UFJ Financial Group. The digital currency is being developed with one primary aim – to facilitate converting between local and foreign currencies. MUFG Coin is reported to have a fixed value.
The Asahi Shimbun newspaper reported last week that the bank was planning to make the virtual currency available next year.
“Regarding the speculation (in) media reports, these reports are not based on any announcement by MUFG, and the details have not been decided,” the bank’s spokesman said to Reuters.
“However we can only say that it’s true that MUFG is conducting demonstration experiments on the ‘Coin’ within the company utilizing a block chain technology.”
If the MUFG coin project is a success, that will mean sizable savings in managerial costs, transaction fees and tariffs associated with international remittances.
“MUFG coin takes advantage of the new technology that is on a network of multiple small computers. It is possible to cheaply build a tamper-resistant “transaction record of the ledger,” referred to as the “block chain””, says the report from The Asahi Shimbun.
The report was initially published in Japanese. According to it, users will be able to withdraw funds from their bank accounts into an app on smartphones. The bank will convert money at a fixed rate of one MUFG coin to 1 yen. Users will have an opportunity to remit MUFG coins to others at a low commission through the internet.
Now the bank is working on automatic teller machines for the convenience of customers who will be able to withdraw MUFG coins onto their phones and to change MUFG coins into cash. Bank of Tokyo-Mitsubishi UFJ is planning to develop the ATMs by spring 2018.
Tokyo-Mitsubishi UFJ is also one of 42 members of the R3CEV consortium. The goal of the project is to broaden the usage of blockchain among financial institutions. The last member to join the consortium is Hong Kong-based life insurance group AIA. Simeon Preston, AIA’s Group Chief Operations Officer, underlined the importance of the collaboration launched by R3: “AIA is excited to join R3 as the first pan-Asian life insurer, as distributed ledger technology or blockchain offers significant opportunities to the life and health insurance industry.
Meanwhile, the price of bitcoin continues to grow. It reached its peak of $719 US on Monday. This is the highest price since the beginning of 2014, when the currency was on its way back down after being valued at more than $1,200 US the previous year.