Swiss Banks Complete First Binding Payments on Public Blockchains

Three leading Swiss banks—PostFinance, Sygnum Bank and UBS—collaborated under the Swiss Bankers Association to pilot the inaugural binding interbank payment using tokenized bank deposits on a public blockchain. Conducted as part of a feasibility study, the trial involved clients sending digital deposit tokens, representing traditional bank deposits, across institutional boundaries on a shared ledger.

The experiment demonstrated that tokenized deposits could achieve immediate and definitive settlement between different banks. Unlike traditional payment systems that rely on batch clearing and final settlement processes, the blockchain-based approach ensured that once a payment instruction was transmitted, the ledger update was final and irrevocable. This eliminated counterparty risk between participating institutions during the settlement interval.

During the study, deposit tokens were “minted” by tokenizing bank deposits and then transferred on Ethereum’s public blockchain. The participants settled two use cases: peer-to-peer customer payments across banks, and a delivery-versus-payment scenario in which tokenized assets were exchanged under escrow conditions. In both scenarios, smart contracts managed the on-chain coordination, while settlement finality was anchored in the Swiss Interbank Clearing system.

Thomas Frei, head of product innovation at Sygnum Bank, described the pilot as"something really new," emphasizing that tokenized deposits can operate across different banking entities without the need for a central coordinator. The results confirm the feasibility of integrating blockchain payments into automated business processes, such as triggering securities settlements or insurance payouts once predefined conditions are met.

Despite Switzerland’s efficient domestic payments network, existing systems cannot support programmable conditions or seamless integration with blockchain-based markets. Tokenized deposits could address this gap, offering programmable, final settlement on shared infrastructure. Banks may next explore scaling the solution, refining regulatory compliance frameworks, and establishing custody and oversight mechanisms for deposit tokens before a broader rollout.

The pilot underscores a shift toward leveraging public blockchains for interbank payments and positions Switzerland as a leader in integrating traditional finance with distributed ledger technology. Further industry collaboration and regulatory clarity will be essential to move from proof of concept to production implementations.