31 Jan 2020
The Monetary Authority of Singapore (MAS) has joined the group of institutions which favorably look on and support the development of blockchain-based technologies, as of November 2019 they have funded the successful development of a blockchain prototype that enables payments to be carried out in different currencies…
At the end of 2019 The Monetary Authority of Singapore (MAS) finished leading the first successful development of a DLT prototype which is made to enable payments which are carried out in different currencies inside the one solution.
This proof of concept which is, sponsored by MAS and in close partnership with J.P. Morgan and Temasek. It has a chance to make the system much cheaper which will be beneficial to all businesses. When the testing phase passes we’ll know that this system is compatible with other blockchain technologies. This proof of concept was introduced to the public at the Singapore Week of Innovation, Singapore FinTech Festival and TeCHnology (SFF x SWITCH) 2019.
For MAS this was a big momnent as it marks the latest milestone for Project Ubin and whith this project it entered into its fifth phase. Phase 4 of Project Ubin, gave a funcation to build on it, i.e. we have set in place payments network with defined APIs to interconncet with other blockchain networks. Features MAS wanted to cover are Delivery-versus-Payment (DvP) settlement with private exchanges, conditional payments and escrow for trade, as well as payment commitments for trade finance.
Comerical viabilty of DLT was proven with Project Ubin as a payments network. The MAS so far has independently engaged 40+ financial and non-financial firms with a purpose to explore the potential benefits.
John Hunter, Global Head of Clearing and Interbank Information Network (IIN), J.P. Morgan, said, “J.P. Morgan is excited to be an infrastructure partner of MAS and Temasek for Phase 5 of Project Ubin. By leveraging our key learnings from building the Interbank Information Network® (IIN) and the JPM Coin, J.P. Morgan is well-positioned to support the development of a blockchain-based payments network and operate at scale.”
Chia Song Hwee, President & Chief Operating Officer, Temasek, said, “Blockchain technology has great potential in transforming businesses and opening up new business opportunities. To better understand the impact and value of blockchain technology, we are pleased to have partnered with MAS and J.P. Morgan for the Ubin platform. The inclusion of non-financial services companies has demonstrated applicability of blockchain technology beyond capital markets and trade finance. We look forward to deeper collaboration and support for Singapore’s pioneering efforts in the blockchain space.”
Strategy and consulting company Accenture has been hired by MAS to create a report in early 2020 in which they will describe the blockchain use cases that could be built on top of DLT-based payments network,also they can recommend additional features that network should support in future. MAS is that all technical specifications be released under Apache License Version 2.0.
Sopnendu Mohanty, Chief FinTech Officer, MAS, said, “There is growing evidence now that blockchain-based payments networks are able to enhance cost efficiencies and create new opportunities for businesses. We hope this development will encourage other central banks to conduct similar trials, and we will make the technical specifications publicly accessible to accelerate these efforts. We look forward to linking up with more blockchain networks to improve cross-border connectivity. This will be a big step forward in making cross-border transactions faster, cheaper, and safer.”
Project Ubin goal is to help MAS and the financial industry to recognise DLT technology and it’s potentials through practical experimentation. End goal is to develop a user -friendly system based on this proof of concept based on central bank issued digital tokens.
In Phase 1:
MAS has made partnership with R3 and a group of financial institutions to make basic solutions to do interbank payments using Blockchain technology.
In Phase 2:
MAS and The Association of Banks in Singapore (ABS) created software prototypes in three different ways of approach to enable decentralised interbank payments and settlements with liquidity savings mechanisms
In Phase 3: Delivery versus Payment (DvP)
MAS and Singapore Exchange (SGX) made a partnership and developed Delivery versus Payment (DvP) solution with a goal to have settlement of tokenized assets across many different blockchain platforms. They published report as well where they judge possible problems that could occur by relaying on Smart Contracts
Phase 4: Cross-border Payment versus Payment (PvP)
The Bank of Canada (BoC), Bank of England (BoE) and MAS have together created and published a report in which they analysed alternative payment and settlement models that could work on cross-border payments and settlements.This report pave a way to experimental domestic payment networks, namely Project Ubin and Project Jasper, which where shown to be a successful experiments as a cross-border and cross-currency payments using central bank digital currencies.