MAS introduced ‘SGD-on-ledger’ concept for Blockchain-based interbank payment system PoC

A high-level view of Project Ubin’s architecture between different banking systems and users. The blockchain based system is linked to the conventional  payment system. Fund transfers in the MEPS+ become value transfers in the Ethereum blockchain. (Source: The future is here Project Ubin: SGD on Distributed Ledger, page 18)

In November 2016, the central bank and financial regulatory authority of Singapore, MAS (Monetary Authority of Singapore) announced that it was partnering with R3, a blockchain technology company and a consortium of the world’s largest financial institutions on the production of a proof-of-concept (PoC) to conduct interbank payments facilitated by DLT (Distributed Ledger Technology; commonly known as Blockchain).

Bank of America Merrill Lynch, Credit Suisse, DBS Bank, The Hongkong and Shanghai Banking Corporation Limited, J.P. Morgan, Mitsubishi UFJ Financial Group, OCBC Bank, Singapore Exchange (SGX), United Overseas Bank participated, along with BCS Information Systems as a technology provider.

The endeavour, titled Project Ubin, aimed to evaluate the implications of having a tokenised form of the SGD on a DL, and its potential benefits to Singapore’s financial ecosystem.

In March 2017, MAS announced the successful completion of Phase-1 of the project. Here, we take a look at the detailed paper published on the MAS website.


As part of project Ubin, MAS introduced the concept of SGD-on-ledger, distinguishing it from existing forms of digital central bank money such as the deposits that banks hold at the MAS which are used to make payments via MEPS+ (MEPS+ is a Real-Time Gross Settlement (RTGS) system for large-value local currency interbank funds transfers between participants, subject to the availability of funds and securities).

A physical analogy for SGD-on-ledger could be a specific use coupon issued on a one-to-one basis in exchange for money. They are meant for specific use, in this case the settlement of interbank debts, but have no value outside of this.

 It can be designed with additional features to support the use case – such as security features against misuse. 

Phase-1 objectives

The prototype for a domestic payments system for inter-bank obligations would have to include a DL (distributed ledger) to track participant balances. It would have to enable real-time creation, transfer and destruction of participant balances on the DL. In addition, it would have to be “always-on,” allowing round-the-clock balance transfers on the DL and it would need to be integrated with the existing central bank settlement infrastructure.  

The linkage of the DL with the MEPS+ RTGS and Current Account Systems (CAS) enables automated management of collateral that backs the outstanding float of SGD-on-ledger. The CAS stores balances overnight and is considered part of the Minimum Cash Balance (MCB) regulatory requirement of the banks set by MAS. It is where the bank’s money is held when the money is not being used for payments. Typically, this account is kept at its minimum required level, with excess moved in the morning to the RTGS account to support RTGS transfers, and returned in the evening.

The RTGS is usually funded from the CAS account in the morning and drained back to the CAS account in the evening. For Project Ubin, a new kind of account was created, the DR (Depository Receipt) Cash Custody account. The balance in the account is periodically adjusted to match the outstanding amounts of DR owed to the account holder. The RTGS account was used to transfer money to and from the DR Cash Custody account.


A working interbank transfer prototype on a private Ethereum network was built. Successful end-to-end integration between the private Ethereum network and the MEPS+ test environment was achieved.

Participants pledge cash into a custody account held at the central bank. Then MAS creates an equal value in Digital SGD on the DL and sends each bank an amount of Digital SGD equal to the amount they pledged. Once banks receive their Digital SGD transfers from the central bank, they are free to make transfers to each other or back to the central bank. The exchange of Digital SGD on the DL occurs without credit risk for participants, as transfers of Digital SGD are transfers of a binding claim on the central bank’s currency and the central bank is not subject to default.  But the current iteration of the Project Ubin utilises cash custody accounts, whose ownership remains with the holder, and hence are not truly bankruptcy remote (if the counterparty goes bankrupt, then the account will go into the bankruptcy proceedings. A true collateral account might have to be developed within the MEPS+ CAS system. 

Banks fund their expected payments on a gross basis with payments and hence there is virtually no liquidity risk in the DL. The failure or outage of the largest participant would not prevent remaining participants from completing their desired payments (if it was funded was net basis, as in each bank, funds to the extent of its net obligations, then the default of a large participant would trigger a domino effect, leading to other parties being unable to make payments).

In the future, it is possible that the DL could coexist as a permanent facility alongside a conventional payment platform such as MEPS+.

In that situation, banks would have to decide on an allocation of liquidity to each system. There could be the risk that one facility or the other will not be adequately funded.

The project paper states that it is also possible that the greater transparency of the DL (to the extent that this is preserved in future implementations beyond Phase 1, which is fully transparent) could offer advantages for liquidity management, allowing participants to substitute and optimise pledged collateral with greater efficiency. MAS would also consider whether advanced liquidity management techniques might introduce new risks.


Phase 2 of Project Ubin would focus on evaluating the usage of DLT for Deliver vs Payment for Singapore Government securities SGS (led by SGX) and a PvP (Payment vs Payment) track which would continue work on domestic payment system and potential cross-border PvP opportunities. Cross-border operations require international cooperation on standards, the ability to identify payers and payees, and systems of adequate scale.

An additional workstream would evaluate the value proposition of DLT for ecosystem participants and suggest a target operation model. This would inform as well as influence the industry for DLT adoption.

The ultimate goal of Project Ubin is to reduce risk and costs for cross-border settlements of payments and securities.

Read the complete report: The future is here Project Ubin: SGD on Distributed Ledger

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