MAS and Bank of Canada Run Trial on Cross-Border Payments Using DLT
MAS and Bank of Canada conducted a successful experiment on cross-border and cross-currency payments using central bank digital currencies. This is the first such trial between two central banks and has great potential to increase efficiencies and reduce risks for cross-border payments. Following the successful conclusion of the project, the Bank of Canada and MAS have jointly published a report titled “Jasper-Ubin Design Paper: Enabling Cross-Border High Value Transfer Using Distributed Ledger Technologies.”
The joint report by Bank of Canada and MAS describes how the Jasper and Ubin prototype networks, developed on different blockchain platforms, were able to inter-operate, allowing for cross-border payments to be settled on central bank digital currencies, which, in turn, enables greater efficiencies and reduces risks. The report describes the technical implementation of Hashed Time-Locked Contracts (HTLC) and highlights possible limitations and challenges with the implementation model. The report further suggests areas of research in Distributed Ledger Technology (DLT) inter-connectivity mechanisms and alternative network models. This represents opportunities for further collaboration among central banks, financial institutions and fintech firms.
The Bank of Canada and MAS collaborated in the use of DLT and central bank digital currencies to make the cross-border payment process cheaper, faster, and safer. The two central banks have successfully linked up their respective experimental domestic payment networks, namely Project Jasper and Project Ubin, which are built on two different DLT platforms. The project teams used a technique called HTLC to connect the two networks and allow Payment versus Payment (PvP) settlement without the need for a trusted third party to act as an intermediary. The Jasper-Ubin project was carried out in partnership with Accenture and J.P. Morgan, who supported the development of the Canadian network on Corda and the Singapore network on Quorum, respectively.
Keywords: Asia Pacific, Americas, Singapore, Canada, Banking, Cross-Border Payments, Project Jasper, Project Ubin, Fintech, Blockchain, Distributed Ledger Technology, Bank of Canada, MAS
Previous Article
ECB Recommendations Address Impact of Transition from EONIA to €STRRelated Articles
ECB Amends Guideline on Temporary Collateral Easing Measures
ECB published Guideline 2021/975, which amends Guideline ECB/2014/31, on the additional temporary measures relating to Eurosystem refinancing operations and eligibility of collateral.
EIOPA Releases Report on Artificial Intelligence Governance Principles
EIOPA published a report, from the Consultative Expert Group on Digital Ethics, that sets out artificial intelligence governance principles for an ethical and trustworthy artificial intelligence in the insurance sector in EU.
HKMA to Increase Focus on Suptech and Regtech Cloud Adoption
HKMA published the seventh and final issue of the Regtech Watch series, which outlines the three-year roadmap of HKMA to integrate supervisory technology, or suptech, into its processes.
EC Consults on Improving Transparency in Secondary Markets for NPLs
EC launched a targeted consultation to improve transparency and efficiency in the secondary markets for nonperforming loans (NPLs).
BIS and Nordic Central Banks Launch Innovation Hub in Stockholm
BIS, Danmarks Nationalbank, Central Bank of Iceland, Norges Bank, and Sveriges Riksbank launched an Innovation Hub in Stockholm, making this the fifth BIS Innovation Hub Center to be opened in the past two years.
FDIC Tech Sprint Aims to Explore Technologies to Reach Unbanked
FDITECH, the technology lab of FDIC, announced a tech sprint that is designed to explore new technologies and techniques that would help expand the capabilities of community banks to meet the needs of unbanked individuals and households.
EC Releases Sustainable Finance Taxonomy Compass
EC released the EU Taxonomy Compass, which visually represents the contents of the EU Taxonomy starting with the EU Taxonomy Climate Delegated Act.
FDIC Proposes Amendments to Real Estate Lending Standards
FDIC is seeking comments on a rule to amend the interagency guidelines for real estate lending policies—also known as the Real Estate Lending Standards.
EIOPA to Consider Liquidity Risk in Stress Test for 2021
EIOPA published its annual report, which sets out the work done in 2020 and indicates the planned work areas for the coming months.
ESRB Paper Discusses Measurement of Impact of Bank Failure via Lending
The ESRB paper that presents an analytical framework that assesses and quantifies the potential impact of a bank failure on the real economy through the lending function.
