Global asset manager and Swiss bank UBS has developed and successfully piloted a blockchain-based payment solution, aiming to increase efficiency and transparency, as well as enable the programmability of money movements for corporate and institutional clients.
The solution, dubbed UBS Digital Cash, aims to increase the transparency and security of cross-border payments with blockchain-based payments.
Cross-border payments often lead to delayed settlements, creating a fragmented view of liquidity positions for companies. UBS Digital Cash looks to facilitate timely payment processing to combat this. Companies should also be able to manage intraday liquidity and adjust liquidity buffers on their accounts more easily in the future, thanks to enhanced visibility of their total cash positions.
Andy Kollegger, head of institutional and multinational banking at UBS, says: “UBS Digital Cash going forward aims to enable our clients to make cross-border payments in a much more efficient and transparent way. Blockchain-based payment solutions for cross-border payments are a strategic focus for UBS. With the successful UBS Digital Cash pilot, we have reached another important milestone.”
In the pilot, UBS successfully carried out transactions with multinational clients and banks, including domestic transactions within Switzerland and cross-border payments in US dollars, Swiss francs, Euros and Chinese yuan. The pilot also included the transfer of liquidity between various UBS companies. UBS plans to further expand and develop its UBS Digital Cash offering.
Pilot participant Janko Hahn, head of treasury operations at Autoneum, said: “The UBS Digital Cash pilot showcased the key advantages of blockchain-based payment solutions. They make cross border transactions faster, on time and provide seamless traceability, which is a huge benefit when operating in a global market.”
Eyes on tokenised asset settlement
For payment processes, UBS Digital Cash uses a private blockchain network to which only the permissioned clients have access. The settlement is performed via smart contracts, which, for example, automatically execute payments as soon as predefined conditions are met. Client transfers at UBS are recorded and processed in a digital system for recording transactions – independent of currency, practically in real-time and around the clock.
Xiaonan Zou, UBS head of digital assets, group treasury, adds: “We see the interoperability between UBS Digital Cash and other digital cash initiatives as key for the financial industry. In addition to their role in correspondent banking, they also have the potential to streamline and simplify the settlement of tokenised assets in the capital market.”
UBS Digital Cash complements UBS’s involvement in a wide range of market initiatives, such as the Swiss National Bank-led project Helvetia for real wholesale Swiss franc Central Bank Digital Currency (wCBDC), as well as the Agorá project, led by the Bank for International Settlements, alongside seven central banks, to unlock central bank money and tokenised deposits from commercial banks in the cross-border payment context.
