Monetary Authority of Singapore (MAS) shared news on 02 May about its collaboration with The Bank of Canada on a successful experiment related to cross-border payments using Distributed Ledger Technology (DLT).
MAS commenced by conveying that the cross-currency trial was done using central bank digital currencies. MAS emphasized that this was the first experiment between two central banks, and holds great promise to increase efficiencies for cross-border payments. There are also many benefits to reducing risks associated with such transactions.
The Singaporean banking major cited on the current inhibitions as –
“Cross-border payments today are often slow and costly. They rely on a correspondent banking network that is subject to counterparty risk, inefficient liquidity management, and cumbersome reconciliation. The Bank of Canada and MAS have been collaborating in the use of Distributed Ledger Technology (DLT) and central bank digital currencies to make the cross-border payment process cheaper, faster, and safer.”
MAS clarified that the two central banks have brought together their respective domestic payment networks, Project Jasper and Project Ubin. These networks are built on two different DLT platforms. The development team uses a specialized technique to connect the two networks thereby allowing settlement without the need of an intermediary. MAS highlighted that the ‘Jasper-Ubin’ project was conducted in partnership with Accenture and JP Morgan.
MAS added that post successful completion of the project, the two banks have published a report that explains different designs for cross-border settlement systems. The report further details areas of research in DLT such as alternative network models and interconnectivity mechanisms. MAS clarified that these research areas hold opportunities for further cooperation among central banks, financial institutions, and FinTech firms.
In February, MAS shared a media release alerting citizens not to be lured by fraudulent websites that request investments in cryptocurrencies using fabricated information. MAS expressed it as a scam and warned the public to avoid providing any economic or personal details on the forms linked from these false websites. Singapore citizens were encouraged to report any suspicious investment offers.
Scott Hendry, Bank of Canada Senior Special Director, Financial Technology expressed that the process of cross-border payments is riddled with complexity. The Canadian bank’s endeavor to use DLT helps improve the traceability of such payments. Sopnendu Mohanty, Chief FinTech Officer, MAS added that Project Jasper and Project Ubin have utilized previous innovations in the payments area and proved that such payments can be efficient. Sopnendu indicated that these projects have elevated technology to a higher level of understanding.