The Swiss banking power UBS, the Crypto Sygnum banking specialist and post-finance, a subsidiary of the Swiss post-belonging from the State, successfully tested payments between the institutions on Ethereum, according to a press release on Tuesday.
The proof of concept, managed under the Swiss Bankers Association, has seen UBS, PostFinance and Sygnum transactions effect transactions using deposit tokens – digital representations of bank deposits which can move on a public blockchain.
Payments were legally adjusted between banks without relying on the traditional payment system. The transactions were carried out on Ethereum using an authorized framework.
Switzerland already has an effective network of national payments, but traditional systems cannot manage programmable conditions or easily integrate into the blockchain markets, companies said. With deposit tokens, transfers could in the future be treated instantly and linked to automated conditions through smart contracts.
For example, a securities trade could set up as soon as the property is transferred, or an insurance payment could trigger once a complaint is validated.
The trial tested two use cases: payments between peers between customers of different banks and a sequestable type configuration where the deposit tokens were exchanged for tokenized assets.
Although the project has confirmed the technical and legal feasibility, the scaling of the system will require a broader participation of banks, infrastructure providers and regulators. Switzerland Bankers Association said that the work was its strategic priority on digital currencies, but that the pilot does not mean that the deposit tokens will be introduced immediately.
