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
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