World premiere in blockchain payments: Canada & Singapore announce successful central bank cooperation
The central banks of Canada and Singapore announce this week an unprecedented milestone. As the world’s first state-owned financial institutions, they are celebrating the joint premiere of their blockchain-based payment system for cross-border transactions. They also publish the joint cooperation of their respective blockchain systems Jasper and Ubin in a joint report. This should promote the further development of the technologies, especially by central banks and monetary authorities.
Constantly fluctuating exchange rates, different administrative systems worldwide, a flood of regulations and regulations – there are many hurdles to settling payments across national borders. The result: Often such transactions not only require extremely long processing times. In addition, payments from one country to another are often extremely expensive.
The central banks of Canada and Singapore, the Bank of Canada (BoC) and the Monetary Authority Singapore (MAS), have jointly declared the problem of this problem. Since 2016, they have been developing Blockchain solutions to make cross-border payments cheaper, faster and more secure.
On May 2, the two financial houses announced the joint success of a milestone so far. As the world’s first of its kind, central banks are celebrating the successful test run of their corporate blockchain payment system for handling cross-border, international transactions. According to a press release, the Blockchain cooperation shows “great potential to increase the efficiency of cross-border payments while reducing their risks”.
The joint project links the two separate systems of digital central bank currencies in Singapore and Canada, Jasper and Ubin. As these are located on two different tech platforms, R3’s Corda network and J.P.Morgan’s quorum, central banks developed specially designed contracts called hashed time-locked contracts.
These now allow the state-owned banks to make direct payments with no intermediary clearing agents or middlemen. They were supported by the US bank J. P. Morgan and the tech service provider Accenture, which in turn are responsible for the technical backbone behind the systems of Jasper and Ubin.
Cooperation still an experiment – central banks demand common standards
The two monetary authorities have now also published a report summarizing the findings from the test run, portraying further fields of application and design options as well as disclosing future construction sites for the technology. In addition to other central banks, they want to motivate the “global financial community” to invest in the development of efficient blockchain technologies. These could solve future key challenges, especially from state-owned banks:
“A fragmented world of different standards, processes, standards and regulations is today the biggest challenge in cross-border payments, and distributed ledger technologies could provide a simpler and faster way to handle them than a [conventional] centralized approach can On the one hand, it leaves the various areas of responsibility with responsibility for their part of the network, while at the same time allowing close integration with the rest of the network.
Despite their success, however, central banks insist that their blockchain cooperation is currently still an experiment.
“Whether we use blockchain technology for higher value cross-border payments remains to be seen, but we will continue to explore and test it.
so the report on the future of central bank cooperation. More than all technological leaps, but above all, it needs common legal standards.