Major financial institution JPMorgan Chase set to introduce a digital retail bank within German borders.
Swiss Banks Pioneer Blockchain-Based Payment System with Deposit Tokens
The Swiss financial sector has taken a significant step forward in modernising its payment systems, with the Swiss Bankers Association (SBA), PostFinance, Sygnum, and UBS completing a feasibility study on payments with digitised bank deposits on a public blockchain. This initiative marks a first for the Swiss financial centre and represents a coordinated effort by Swiss banks to contribute to the development of future payment systems.
The deposit token concept aims to address limitations of today's payment systems in dealing with emerging digital business models. By bringing bank deposits onto the blockchain, the deposit token enables 24/7 payments, full integration into digital processes, and automation. Two use cases were examined: payments between customers of different banks and the automated exchange of assets via a trust-like process.
Martin Hess, Chief Economist and Head of the SBA's Digital Currencies Project, stated that the tested token is a strategic step towards the future of the payment system. Alexander Thoma, Head of Digital Assets at PostFinance, highlighted the practical implications, stating that the deposit token offers great potential for making payment transactions more efficient and secure.
The technology allows for programmable transactions through smart contracts, enabling automatic payments when conditions are met. Potential applications of deposit tokens include automated securities trading and machine-to-machine transactions in the Internet of Things. Payments using deposit tokens are legally binding, and regulatory requirements and depositor protection are met.
The study's findings serve as the basis for a broader introduction and further development of the deposit token. The next phase involves adjustments to the model and wider collaboration with other banks and authorities. The aim is to make blockchain-based payments more broadly available to Swiss bank customers.
Banks involved in the cooperation for further development of blockchain-based payments include the Swiss National Bank (SNB) with Project Helvetia, the Monetary Authority of Singapore (MAS) with Project Ubin, and the South African Reserve Bank (SARB) with Project Khokha, as well as international institutions like the Bank for International Settlements (BIS). Future applications for deposit tokens discussed include improving interbank transaction settlement, cross-border payments, liquidity optimization, and the establishment of innovative business models on distributed ledger technology platforms.
In conclusion, the feasibility study on payments with digitised bank deposits on a public blockchain signifies a shift towards modernised, efficient financial infrastructure. The deposit token offers great potential for streamlining payment transactions, enhancing security, and enabling the integration of emerging digital business models.
Read also:
- Musk threatens Apple with litigation amidst increasing conflict surrounding Altman's OpenAI endeavor
- E-mobility continues its progress after a decade since the scandal, staying on course
- The Commission deems the assistance program to be in agreement with the domestic market regulations.
- Innovative Garments and Accessories Producing Energy: Exploring Unconventional Sources for Renewable Power
