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Swiss Banking Giant UBS Pilots Blockchain-Based Payment System to Enhance Financial Transactions

UBS Successfully Tests Blockchain Payment System for Efficient Cross-Border Transactions

Mwangi Enos

Swiss banking giant UBS has successfully completed a pilot for its blockchain-based payment system, UBS Digital Cash, marking a significant step forward in enhancing the efficiency of cross-border financial transactions. The pilot, which took place with multinational clients and banks, aimed to streamline the transfer of funds, offering a solution that supports domestic payments in Switzerland as well as international payments in currencies such as U.S. dollars, Swiss francs, euros, and Chinese yuan.

According to UBS, the system is designed to improve the speed, transparency, and security of cross-border transactions. Andy Kollegger, head of UBS Institutional & Multinational Banking, highlighted the strategic importance of blockchain-based payment solutions for enhancing the efficiency of cross-border payments, which have traditionally been complex and costly. "UBS Digital Cash going forward aims to enable our clients to make cross-border payments in a much more efficient and transparent way," Kollegger said.

The pilot tested the intraday liquidity management between UBS subsidiaries and its multinational clients. One of the key features of the system is its ability to offer greater visibility into cash positions, allowing firms to manage their liquidity buffers more effectively. With the increased transparency provided by a blockchain, users can track their funds in real-time, ensuring more accurate decision-making regarding account balances and liquidity management.

UBS Digital Cash runs on a closed permissioned blockchain network hence allowing only restricted parties to access the network guaranteeing all the parties involved confidentiality. In this system, smart contracts are applied; these are contracts in which the conditions of the agreement are embedded directly into the code. These contracts run payments based on the existence of certain conditions and this aspect eliminates most human intervention in making the transactions.

The Swiss company UBS has announced that in the future months, it will continue to extend the capability of Digital Cash and develop it even more. This move complements the bank’s long-term vision to incorporate blockchain in all its financial services for the realization of efficiency, cost slash and effective disclosure in finance services.

While the stock market is still trying to discover the potential of blockchain technology, the presence of UBS’s Digital Cash shows that blockchain is becoming an increasingly critical tool in reimagining the global payment system, with a particular focus on cross-border payments. 

Cross-border payment has always been an area of fascination where blockchain has been touted to make changes to simplify, in a literal sense of the term, global banking and payments processing and the experiment that UBS just had with Digital Cash shows that this can be as practical as promised.

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