LHV says that Cuber (Cryptographic Universal Blockchain Entered Receivables) is technically a new kind of certificate of deposit that can be used as a building block for innovative financial products.

The bank has also set up a fintech subsidiary, Cuber Technology, that is developing an iOS and Android app that is slated to go beta later this year, using blockchain infrastructure to let people make free person-to-person fiat currency payments.

LHV says that it is the first bank in the world to experiment with real programmable money, issuing receivables in the form of colored coins. As a technological platform and a financial instrument Cuber is designed to be used to store or generate value, transferring value, managing liquidity, and automate transactions between machines.

Both Cuber and the associated wallet are built on top of open colored coins technological standard and use the bitcoin blockchain as a database. Its decentralised and open source nature is designed to open Cuber up to developers who can program it to take on new functions.

LHV says that it wants to help drive financial innovation at smaller software developers, rather than banks, and that start-ups and crypto currency exchanges could take advantage of its platform.

Rain Lõhmus, CEO, Cuber Technology, says: "The potential of Cuber is huge - think telecommunication industry developments last 20 years. How many new cool applications we are daily using have come out from Development Departments of telecom companies. No, they are coming from startups. This is possible due to the widespread usage of decentralised TCP/IP protocols.

"We hope Cuber can do something similar to financial industry - liberate innovation from organisational borders, truly decentralise it. And true innovation in financial sector will flourish."