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Singapore, Canadian Central Banks Unite on Blockchain Cross-Border Payments

Last Updated October 1, 2020 4:54 PM
Samburaj Das
Last Updated October 1, 2020 4:54 PM

Singapore’s central bank has announced a slew of initiatives during the ongoing FinTech Festival, including a notable partnership with the Bank of Canada on cross-border payments using blockchain.

On the second day of the week-long Singapore FinTech Festival today, Ravi Menon, director of the Monetary Authority of Singapore (MAS), Singapore’s central bank and financial regulator, spoke at length about Project Ubin – the central bank’s effort to place a tokenized Singaporean dollar (SGD) on a blockchain.

Menon called for the need to establish a “more efficient and secure” way to conduct cross-border interbank payments, a process currently reliant on intermediaries that could take days to settle. Project Ubin, the central banker said, uses blockchain technology to enable central banks to make direct payments without intermediaries at near-instant speeds and minimal risks.

Earlier this year, Phase 1 of Project Ubin successfully trialed a digital Singapore dollar on a private Ethereum blockchain. Phase 2 saw the development of three software models enabling decentralized interbank payment and settlements with liquidity savings while preserving transactional privacy.

Now, Singapore’s central bank is expanding its Project Ubin program beyond Singapore to establish a partnership with its counterpart in Canada.

Menon revealed:

We are pleased to announce a collaboration on cross-border payments with the Bank of Canada using blockchain technology.

Earlier this year, the Bank of Canada published results of its own blockchain experiment to test CAD-Coin, a digital currency developed in collaboration with New York-based industry startup R3. In it, the Canadian central bank determined that ‘a stand-alone DLT (distributed ledger technology) wholesale system is unlikely to match the efficiency and net benefits of a centralized system.’ It’s notable that the Bank of Canada is continuing its blockchain endeavor, this time with Singapore’s central bank – the latter which has already achieved early successes in developing its own digital currency token to power a blockchain interbank payments platform.

Significantly, the MAS will also publicly release the source codes for all three software prototypes from Phase 2, at no cost, following heightened interest from other central banks and academia.

Featured image from Shutterstock.