Central banks settle cross-border payments with Blockchain for the first time

The central banks of Canada and Singapore have concluded a trial of cross-border payments using blockchain technology and central bank digital currencies.

The Bank of Canada (BoC) and the Monetary Authority of Singapore (MAS) jointly announced that the success of this trial – the first of its kind between two central banks – presented considerable potential for improving the Bank's ability to bankruptcy. 39, efficiency and risk reduction for cross-border payments. "

These efforts allowed BoC and MAS to link their respective Blockchain, Jasper and Ubin projects, which are based on two different blockchain networks: R3's Corda and JPMorgan's Quorum, respectively. Both networks were connected using a technique called "synchronized hash contracts" and allowed for PvP settlement without resorting to an intermediary.

Accenture and JPMorgan, who collaborated on the Canadian Corda Project and the Singapore Quorum Project, provided technical support to the project.

Scott Hendry, Senior Special Chief of Financial Technology at the Bank of Canada, said:

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

Jasper and Ubin ongoing since 2016 as part of efforts to increase bank payment efficiency.

"The success of the Jasper-Ubin project is an important step in modernizing cross-border currency transactions," said David Treat, general manager of Accenture and global communications chain leader, Global Blockchain.

The two central banks have also jointly published a report describing the different design options for setting up such settlement systems and stating:

"A fragmented world, with different standards, processes, standards and regulations, is the biggest challenge for cross-border payments today. The DLT could offer an easier and faster adoption path than a centralized approach because it can let the different jurisdictions involved in controlling their part of the network while allowing for close integration with the rest of the network. network. "

However, they added that the Jasper-Ubin project is experimental in nature and that it remains to be seen whether the technology using the blockchain will eventually be used for "high value" cross-border payments "remains to be determined".

BoC and MAS have also called on other central banks, financial institutions and technology companies to join in this initiative to make cross-border payments "cheaper, faster and safer".

Bank of Canada image via Shutterstock