Swiss bank UBS tests blockchain for cross-border payments with digital cash

UBS has made a significant step forward in the use of blockchain technology for financial services with its successful pilot of the “UBS Digital Cash” payment system. The pilot, which tested both domestic and cross-border transactions, demonstrates the potential for blockchain to streamline and enhance the efficiency of international money transfers.

The system uses a private blockchain network—UBD Digital Cash—which is restricted to permissioned participants, such as selected clients and financial institutions. By leveraging smart contracts, UBS aims to facilitate faster and more secure cross-border payments, with the contracts automatically executing when certain conditions are met, reducing the need for intermediaries and improving transaction times.

The trial involved multiple currencies, including the U.S. dollar, Swiss franc, euro, and Chinese yuan, showing the versatility of the platform in accommodating different global currencies. This marks an important move for UBS as it explores how blockchain technology can drive improvements in payment systems, reduce operational risks, and potentially lower costs for multinational clients.

UBS joins a growing list of major banks and financial institutions exploring blockchain’s potential for revolutionizing the financial ecosystem, particularly in cross-border payments, which have traditionally been slow and costly due to reliance on intermediaries.

“Blockchain-based payment solutions for cross-border payments are a strategic focus for UBS.”

Andy Kollegger, head of UBS Institutional & Multinational Banking

Xiaonan Zou, UBS’s head of digital assets, emphasized the importance of interoperability between UBS Digital Cash and other digital cash initiatives, highlighting its central role in shaping the future of the financial industry. This reflects the bank’s strategic vision of not just developing proprietary blockchain solutions, but also fostering broader collaboration across the financial ecosystem to ensure that various digital cash systems can work together seamlessly.

This latest initiative fits within a broader framework of UBS’s growing involvement in innovative market projects. For example, UBS is actively participating in the Helvetia project, led by the Swiss National Bank (SNB), which is exploring the use of Central Bank Digital Currencies (CBDCs) for wholesale transactions in Swiss francs. Similarly, UBS is part of the Agorá project led by the Bank for International Settlements (BIS), which aims to test the use of digital currencies for cross-border transactions and further explore the role of blockchain in central banking.

In addition to these blockchain-based payment innovations, UBS recently took a step further into the world of tokenized assets with the launch of the UBS USD Money Market Investment Fund Token. This tokenized investment fund, which operates on the Ethereum blockchain, is aimed at institutional investors in Singapore, marking UBS’s expansion into tokenized financial products and its recognition of the growing demand for blockchain-enabled solutions in the investment space.

Taken together, these initiatives underline UBS’s forward-looking strategy in digital assets and blockchain, aiming to integrate these technologies into both traditional and innovative financial services. The bank’s focus on interoperability, alongside its participation in key global projects, positions UBS as a key player in the ongoing evolution of the digital finance landscape.