Six new banks have joined a UBS-led effort to create a digital cash system that would allow financial markets to make payments and settle transactions quickly via blockchain technology.

The group aims to launch the system late next year.

Barclays, Credit Suisse, Canadian Imperial Bank of Commerce, HSBC, MUFG  and State Street have joined the group developing the "utility settlement coin" (USC), a digital cash equivalent of each of the major currencies backed by central banks, UBS said on today.

The group is in discussions with central banks and regulators and is aiming for a "limited 'go live'" in the latter part of 2018, UBS's head of strategic investment and fintech innovation told the Financial Times.

The Swiss bank first launched the concept in September 2015 with London-based blockchain company Clearmatics, and was later joined on the project by BNY Mellon, Deutsche Bank, Santander and brokerage ICAP.

The USC would be convertible at parity with a bank deposit in the corresponding currency, making it fully backed by cash assets at a central bank. Spending a USC would be the same as spending the real currency it is paired with.

Blockchain works as a tamper-proof shared ledger that can automatically process and settle transactions using computer algorithms, with no need for third-party verification.

Because it does not require manual processing, nor authentication through intermediaries, the technology can make payments faster, more reliable and easier to audit.