Singapore to expand use of blockchain technology

Singapore

SINGAPORE will look at more ways to explore blockchain technology, following a successful experiment with interbank settlement.

THE Monetary Authority of Singapore (MAS) on Thursday said that it would test blockchain technology on settlement in bond trading to make the process more efficient. The project will be driven by the Singapore Exchange.

MAS will also focus on new methods to conduct cross-border payments using central bank digital currency. It is in early stages of discussions to develop links from Singapore to other countries using distributed ledger technology (DLT) to allow cross-border payments to settle directly using central bank accounts.

The central bank said that this follows the successful conclusion of the proof-of-concept project to conduct domestic interbank payments using DLT, which powers the use of blockchains.

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 interoperate with the DLT for automated collateral management.

Sopnendu Mohanty, chief fintech officer at 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."

The proof-of-concept was developed in partnership with a consortium of financial institutions and R3, which in itself is leading a consortium of global financial institutions to develop blockchain usage.

The consortium in Singapore is made up of Bank of America Merrill Lynch, Credit Suisse, DBS Bank, HSBC, JPMorgan, Mitsubishi UFJ Financial Group, OCBC Bank, Singapore Exchange, and United Overseas Bank. BCS Information Systems is the project's technology provider.

Blockchain is a distributed ledger of transactions. It is so named because each digital "block" contains information of financial transactions, which is linked in a virtual chain. Participating banks and other relevant institutions in the blockchain can then access the information on this ledger.

Proponents of blockchain said benefits include greater security, faster turnaround time, and lower cost.

Tim Grant, CEO of R3's lab and research centre, 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," said Mr Grant, who is also a member of MAS's international technology advisory panel.