Swiss and UK Banks Forge Secure Future with Programmable Blockchain Deposits

Swiss and UK banks have launched pilot programs for programmable deposits, leveraging blockchain technology to modernize financial infrastructure and enhance payment efficiency. The initiatives, spearheaded by industry bodies and major banks, aim to explore tokenized deposits as a means to streamline transactions, reduce fraud, and improve settlement processes. These efforts align with global trends toward digitizing financial systems and integrating decentralized technologies into traditional banking frameworks.

In the UK, UK Finance—a trade body representing over 300 financial institutions—has partnered with six major banks (Barclays, HSBC, Lloyds, NatWest, Nationwide, and Santander) to test tokenized sterling deposits (GBTD) through a two-year pilot. The project, supported by Quant Network, a blockchain interoperability firm, will focus on three use cases: person-to-person marketplace payments with conditional logic to mitigate scams, remortgaging workflows with synchronized fund releases, and wholesale asset settlement using delivery-versus-payment mechanisms. The pilot, running until mid-2026, aims to demonstrate how programmable money can reduce fraud, lower transaction costs, and accelerate processes such as home-buying and corporate payments. UK Finance emphasized collaboration with regulators as critical to ensuring compliance and fostering innovation within the existing financial framework.

Swiss banks, including the Swiss Bankers Association (SBA), PostFinance, Sygnum, and UBS, have also advanced programmable deposit initiatives through a proof-of-concept (PoC) project. The Swiss Deposit Token PoC, described as a "common infrastructure for multiple banks," leveraged Switzerland’s 100-year-old legal framework to structure tokenized deposits as digital representations of payment instructions rather than novel crypto assets. This approach prioritized legal certainty over technological novelty, enabling seamless integration with existing systems like the Swiss Interbank Clearing (SIC) network. The PoC demonstrated automated, escrow-like transactions, such as the exchange of CHF 15 in Deposit Tokens for tokenized assets representing physical goods (e.g., wine). These trials highlighted blockchain’s potential to enforce conditional settlements and reduce counterparty risk through smart contracts.

Both initiatives underscore the strategic shift toward tokenized deposits as an alternative to private stablecoins. The SBA and UK Finance argue that tokenized deposits, issued by regulated institutions, offer greater reliability and scalability compared to closed-loop stablecoins. For instance, the UK’s pilot envisions tokenized deposits as a bridge to wholesale central bank digital currencies (CBDCs) and tokenized assets, while the Swiss model aims to evolve into a fully native digital financial infrastructure. Key enhancements include transitioning blockchain from an "informational layer" to an authoritative ledger, integrating with central bank systems, and embedding identity verification directly onto the blockchain.

The projects reflect broader policy goals to modernize payment systems and align with global regulatory frameworks. The UK’s National Payments Vision and the Bank of England’s exploration of conditional payments highlight the potential for programmable money to reshape financial markets. Similarly, Switzerland’s initiative aligns with its ambition to position itself as a leader in blockchain innovation, with SBA economists describing the Deposit Token as a "strategic step toward the future of the payment system." Both regions emphasize interoperability, regulatory compliance, and the need for industry-wide collaboration to scale these solutions.