Swiss Banks Pioneer Blockchain-Based Interbank Payments
Several major banks in Switzerland completed a successful proof-of-concept (PoC) that executed legally binding payments on the public blockchain.
The Swiss Bankers Association (SBA) coordinated the effort, involving UBS, PostFinance, and Sygnum Bank, to test deposit tokens and smart contract-based payment infrastructure.
“The PoC shows that bank money can work with public blockchains, opening new possibilities in the innovation of tokenized assets,” said Christoph Puhr, UBS digital assets lead.
How the Blockchain Payment Test Worked
The experiment focused on two primary use cases:
- Tokenized Payment Instructions: Payment instructions were converted into deposit tokens, prompting off-chain fiat transfers between bank clients.
- Escrow-Like Token Exchange: Deposited tokens were exchanged for tokenized real-world assets (RWAs) through automatic smart contract execution.
According to the banks, this represents the first instance of real money interbank payments with legally binding effect being executed on a public blockchain.
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Smart Contracts and Regulatory Compliance
The SBA highlighted that smart contracts enable verification, technical security, and regulatory compliance. By leveraging public blockchains for permissioned applications, banks can achieve legally binding settlement with assurance.
However, the association noted that scalability remains a challenge. Future design upgrades and closer cooperation among banks, infrastructure providers, and regulators will be essential.
Implications for the Future of Finance
This successful PoC indicates growing interest from traditional financial institutions in blockchain-based payment rails, potentially accelerating the integration of traditional finance with DeFi.
The project enables banks to innovate in tokenized assets and shape the future of financial systems nationally and globally.
Central banks are also exploring smart contracts for financial infrastructure. A report by the Federal Reserve Bank of New York and the BIS Innovation Hub Swiss Centre published in May noted that smart contracts could provide central banks with dynamic tools for a tokenized financial ecosystem—though suitable infrastructure is still under development.
