UBS has made significant strides in financial innovation with the successful pilot of UBS Digital Cash, a blockchain-based multi-currency payment solution. This technology aims to increase efficiency, transparency, and programmability of money movements for corporate and institutional clients, offering a potential revolution in cross-border payments.
Addressing cross-border payment challenges
Cross-border transactions often face delayed settlements, leading to fragmented liquidity views for companies. UBS Digital Cash seeks to eliminate these issues by providing transparent, secure, and timely payment processing through blockchain technology. The solution offers enhanced visibility of total cash positions, enabling companies to better manage intraday liquidity and adjust liquidity buffers with ease.
Andy Kollegger, Head of UBS Institutional & Multinational Banking, highlighted the importance of this initiative, stating, "UBS Digital Cash aims to enable our clients to make cross-border payments more efficiently and transparently." He emphasized the strategic focus on blockchain-based solutions as a crucial part of UBS's growth.
Successful pilot and future expansion
The pilot included transactions with multinational clients and banks, covering domestic Swiss transactions and cross-border payments in US dollars, Swiss francs, euros, and Chinese yuan. Liquidity transfers between various UBS entities were also tested, showcasing the seamless operation of UBS Digital Cash. UBS plans further development and expansion of the solution to provide broader benefits to its clients.
Pilot participant Janko Hahn of Autoneum praised the initiative, noting its potential to make cross-border transactions faster, traceable, and more seamless in a global market.
Innovative payment process via private blockchain
UBS Digital Cash operates on a private blockchain network, accessible only to permissioned clients. Smart contracts drive the settlement process by automatically executing payments when predefined conditions are met. This digital recording system processes transactions in real-time, independent of currency, 24/7. The initiative complements UBS’s involvement in broader digital cash and tokenization projects, including collaborations with central banks.