In a groundbreaking development for Switzerland’s financial landscape, PostFinance, UBS, Sygnum Bank, and the Swiss Bankers Association (SBA) have successfully executed the country’s first legally binding interbank payment utilizing blockchain technology. This trial explored the use of a ‘deposit token,’ which functions as a digital iteration of traditional bank deposits, stored on a public blockchain. Unlike conventional cryptocurrencies, this deposit token is underpinned by regulated financial institutions, thereby reinforcing adherence to necessary financial safeguards and ensuring depositor protection.
The feasibility study examined two distinct scenarios: one involving payments between customers of different banks and the other focusing on the automated exchange of assets. Both tests confirmed that transactions could be executed securely, transparently, and in full compliance with Swiss legal standards. Notably, these payments are binding, marking a significant advance in the practical application of blockchain-based transfers across banking institutions.
Alexander Thoma, head of digital assets at PostFinance, emphasized the potential benefits, stating, “The Deposit Token offers great potential for making payment transactions more efficient and secure for all parties in the future. The feasibility study has shown that blockchain technology works for this and is legally viable.”
The trial was initiated in response to the realization that existing payment systems, while generally fast and efficient, are beginning to show limitations amid the rapid evolution of digital business models. The deposit token aims to address this by integrating bank deposits within the blockchain framework, facilitating continuous payment capabilities that can seamlessly blend into digital processes and become fully automated.
In the wake of this successful trial, participating banks have indicated that future efforts will concentrate on refining the deposit token and enhancing collaboration with other banking institutions and regulatory bodies. Their overarching objective is to extend the advantages of blockchain-based payments to Swiss consumers.
Thomas Eichenberger, deputy CEO of Sygnum, highlighted the transformative potential of blockchain in the financial sector, stating, “Blockchain technology will bring about lasting change to the financial market and payment system. We are demonstrating the potential of this technology using concrete implementation examples. The aim is to drive innovation and create long-term added value for the Swiss financial center.”
