Republic of Singapore, an island city-state off southern Malaysia, is a global financial center with a tropical climate and multicultural population. According to WEF (World Economic Forum), it is the most “technology ready” nation. Singapore has third largest financial centre and foreign exchange market and has also been identified as a tax heaven.
Recently, Singapore's Central Bank has reported its successful implementation of blockchain in interbank's payments proof-of-concept (PoC) project. The Monetary Authority of Singapore (MAS) announced the successful conclusion of the proof-of-concept project to conduct domestic inter-bank payments using DLT (Distributed Ledger Technology). The project has achieved the objectives of producing a digital representation of the Singapore dollar for interbank settlement, testing methods of connecting bank systems to a DLT, and making the MAS Electronic Payment System (MEPS+) interoperate with the DLT for automated collateral management.
Sopnendu Mohanty, Chief FinTech Officer, MAS, said: “This wholesale payments project has demonstrated the commitment of MAS and the industry to co-create concrete use-cases for technologies such as DLT. Already, some institutions have embarked on projects that are inspired by this collaboration. We look forward to the next phases of our project which will develop trial applications for securities settlement and cross border payments.”
Initial announcement of development of a DLT (blockchain) PoC project aiming to develop a payments platform enabling banks to transact between global markets with instant transfers anytime of the day was done in November, 2016 by the MAS. Since then, they have been working in partnership with New York-based blockchain startup firm R3, prominently known for leading a global banking blockchain consortium of major financial institutions, including HSBC, JP Morgan and the Singapore Exchange (SGX) to implement the blockchain technology for the inter-bank platform.
The consortium has commissioned Deloitte to produce a report that covers the aspects of DLT that are most suited to settlement systems and details the design principles used for the prototype.
Tim Grant, CEO of R3’s Lab and Research Center, who is also a member of MAS’ International Technology Advisory Panel, said:
“We have always believed that true progress in advancing the implementation of distributed ledger technology in financial services would be achieved by bringing central banks, commercial banks and technology partners together in an open setting. This effort has confirmed that harnessing the power of collaborative networks can yield demonstrable results and we hope that the progressive stance of all the participants in this project, and especially that of MAS, will inspire similar work in other jurisdictions going forward.”
With the success of DLT experiment, MAS has plans to launch two 'spin-off' projects that will leverage the lessons of the inter-bank payments project. The first project, driven by the Singapore Exchange (SGX), focuses on making the fixed income securities trading and settlement cycle more efficient through DLT. The second project focuses on new methods to conduct cross border payments using central bank digital currency. MAS is in the early stages of discussions to develop links from Singapore to other countries using DLT to allow cross-border payments to settle directly using central bank accounts.
(Source: Monetary Authority of Singapore)
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