The Monetary Authority of Singapore (MAS) announced yesterday the successful conclusion of the proof-of-concept project to conduct domestic inter-bank payments using distributed ledger technology (DLT). The project, in partnership with R3 (a distributed ledger technology company) and a consortium of financial institutions, was first announced on November 16 2016 by MAS at the Singapore Fintech Festival.
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 (MEPS+) interoperate with the DLT for automated collateral management.
MAS has plans for two spin-off projects that will leverage the lessons of the inter-bank payments project. The first project, driven by the Singapore Exchange (SGX), focuses on making the fixed income securities trading and settlement cycle more efficient through DLT. The second project focuses on new methods to conduct cross border payments using central bank digital currency.
MAS is in the early stages of discussions to develop links from Singapore to other countries using DLT to allow cross-border payments to settle directly using central bank accounts.
The consortium has commissioned Deloitte to produce a report that covers the aspects of DLT suited to settlement systems and details the design principles used for the prototype.
Sopnendu Mohanty, Chief FinTech Officer, 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.”
Tim Grant, CEO of R3’s Lab and Research Center, who is also a member of MAS’ International Technology Advisory Panel, 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.”
