UBS, PostFinance and Sygnum signed a memorandum of understanding (MoU) to trial the tokenization of deposits through to late 2025. The Swiss Bankers Association (SBA) says it’s acting as a platform to ensure non-participating institutions are aware of the project’s progress and decisions.
The two initial use cases for the deposit token proof of concept involve basic interbank payments for peer-to-peer payments and an escrow procedure to execute the settlement of financial assets as delivery versus payment. Some of the key benefits of tokenizing bank money include programmability, using it to settle on chain financial transactions (atomic settlement) and the potential for instant settlement 24/7. The latter benefit is also available in many faster payment systems, and Switzerland launched one last month.
The participant banks represent two out of four of Switzerland’s systemically important banks as well as Switzerland’s first digital asset bank Sygnum. The missing two systemic banks are Raiffeisen Group and Zürcher Kantonalbank, although the group is open to other banks joining. However, to move quickly, a small but influential group such as this one is ideal. A project goal is to ensure that banks that join later have a “frictionless and low-threshold entry.”
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