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Monetary Authority Of Singapore And Bank Of Canada Completed Their First Cross-Border Payment Using Blockchain

02/05/2019

The Monetary Authority of Singapore (MAS) announced that it has completed its first cross-border payment with The Bank of Canada (BoC) using the distributed ledger technology blockchain.

In what it refers to as 'Project Jasper-Ubin', the project saw MAS and BoC linking up their respective blockchain projects, Jasper and Ubin, which are built on two different blockchain networks: R3’s Corda and JPMorgan’s Quorum, respectively.

The two networks were connected using a technique called 'Hashed Time-Locked Contracts' (HTLC) to ensure all payments happen at the right time and in the correct order.

Successfully doing so, the two banks claimed to be capable of doing international direct Payment versus Payment (PvP) much quicker than conventional systems which require middlemen to verify the transactions.

Lending tech support for the project were Accenture and JPMorgan, which assisted development of the Canadian project on Corda and the Singapore project on Quorum, respectively.

Overview
Overview of HTLC

According to MAS on its website reporting Project Jasper-Ubin:

"Project Ubin is a collaborative project with the industry to explore the use of Distributed Ledger Technology (DLT) for clearing and settlement of payments and securities. DLT has shown potential in making financial transactions and processes more transparent, resilient and at lower cost."

According to Scott Hendry, Bank of Canada’s senior special director for financial technology:

"The world of cross-border payments is complicated and expensive: our exploratory journey into the use of DLT [distributed ledger technology] to try to reduce some of the costs and improve traceability of these payments has yielded many lessons."

According to David Treat, Accenture’s managing director and global blockchain lead:

"The successful outcome of the Jasper-Ubin project is a big milestone for the modernization of cross-border, cross-currency transactions."
Bank

The project started when MAS announced that it was partnering with R3, a DLT company back on November 2016, as part of efforts to increase the efficiency of banking payments, and also with a consortium of financial institutions on a proof-of-concept project to conduct inter-bank payments using blockchain technology.

On the MAS and BoC joint report describing the different design options to enable such settlement systems, they stated that:

"A fragmented world, with differing standards, processes, norms, and regulations is the key challenge in cross-border payments today. DLT could offer an easier and faster path towards adoption than a centralized approach because it can leave the different jurisdictions involved in control of their portion of the network while allowing for tight integration with the rest of the network."

At this time, the Jasper-Ubin project is experimental in nature.

Sopnendu Mohanty, chief fintech officer at MAS said that:

"Project Jasper and Project Ubin have built on previous innovations in the payments area to demonstrate that cross-border payment and settlement can be made simpler and more efficient. Together these projects have addressed many technical questions and brought the technology to a higher level of maturity."

"The next wave of central bank blockchain projects can make further progress by bringing technology exploration together with policy questions about the future of cross-border payments. It is challenging work, and we welcome other central banks to join us in this global collaboration, to bring benefit to consumers, businesses and the broader financial industry."