The Monetary Authority of Singapore (MAS) today announced that it is partnering R3, a Blockchain technology company, and a consortium of financial institutions on a proof-of-concept project to conduct inter-bank payments using Blockchain technology. This project could potentially avail a payment system for participants to transact in different global markets round-the-clock that are today limited by time zone differences and office hours.
The project will develop a pilot system in which Blockchain infrastructure is used to issue and transfer funds among participants. Such a system will also be more resilient against stoppages by decentralizing and distributing the software that records and validates payments. Participants can depend on the immutable record of transactions at the heart of the Blockchain to reduce the cost of long term record keeping.
In short, Blockchain technology has the potential to make financial transactions and processes more transparent, resilient and at lower cost. The outcomes from the project will provide guidance on future projects such as cross border payments, automation of securities issuance, trading and settlement using Blockchain technology. This will also help MAS and the industry to develop simpler to use and more efficient alternatives to today’s systems.
The consortium includes Bank of America Merrill Lynch, The Bank of Tokyo-Mitsubishi UFJ, Ltd, Credit Suisse, DBS Bank Ltd, The Hongkong And Shanghai Banking Corporation Limited, JP Morgan, OCBC Bank, Singapore Exchange, United Overseas Bank and BCS Information Systems as a technology provider to the project.
Sopnendu Mohanty, Chief FinTech Officer, MAS, said: “The simplification of processes that comes from having a single and coherent, distributed record of information makes Blockchain technology an attractive solution for the financial sector. MAS is engaging with the industry and working closely with our partners to explore innovative payment solutions.”
Tim Grant, CEO of R3’s Lab and Research Center, and member of the MAS International Technology Advisory Panel, comments: “We are delighted to build on our relationship with MAS and bring together a large group of financial institutions from both Singapore as well as global players from our membership. Payments and the representation of fiat currency on Blockchains is a potentially significant use case for distributed ledger technology and we firmly believe that partnership between regulators, central banks and the financial services sector will accelerate solutions to maturity.”
