Switzerland is pushing the frontier of blockchain payments. In a feasibility study led by the Swiss Bankers Association (SBA), they have completed what they say is the first legally binding bank payment using bank deposits executed over a public blockchain. The participating banks include UBS, PostFinance, and Sygnum Bank, according to the press release.
The outcome was such that the proof-of-concept (PoC) showed that payments between different institutions could be settled immediately and definitively on a shared, public ledger. The SBA stated that such payments could in the future be seamlessly incorporated into automated business processes, potentially increasing efficiency and reducing friction in traditional interbank settlement systems.
Immediate & final settlement using a public ledger
One of the technical innovations used in the PoC was “deposit tokens” to represent fiat-money bank deposits. These tokenised deposits permit instruction of interbank transfers via smart-contract logic over the blockchain. The token mechanism allows bank money to move in a digital or even on-chain form between accounts of participating institutions, effectively enabling interbank payments using tokenised bank balances.
Potential for integration, but with caution
While the test marks an important milestone, the SBA cautioned that this PoC does not immediately equate to launching a production-scale system. Regulatory, economic policy, taxation, and technological frameworks still need to be fine-tuned.
Also, while the payment was binding in legal terms for the participants, the scale, frequency, and risk environment (volume, counterparty risk, congestion, etc.) of real-world interbank activity could present more challenges. Previous Swiss banking “deposit token” proposals added that design options, privacy, efficiency, and regulatory fit are all under active study.
SBA’s papers in the past and Swiss banking experiments have explored “deposit tokens” as part of modernising payments and enabling digital money infrastructure. The goal is not merely pilot projects but laying the groundwork for interoperable, regulated, blockchain-enabled payments. The hope is that a breakthrough will chart the route through both traditional banking rails and potentially digital rails.
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