Ravi Menon of MAS on Ongoing Blockchain Projects of the Authority
Ravi Menon of MAS, while speaking at CordaDay Singapore, examined the potential of blockchain technology and stated that blockchain is one of the most misunderstood technologies in recent times. He outlined the misconceptions about blockchain, the scenarios under which blockchain is most suitable, and the ongoing work of MAS in this area. He believes that the blockchain is most suitable in scenarios where it is important to know the histories of ownership, multi-party coordination is required, and there is no trusted central party or reliance on the central party is inefficient. He then discussed two use case experiments from the financial sector in Singapore, where blockchain technology is being applied with good prospects and these are in the areas of clearing and settlement of payments and assets and in trade and trade finance.
Project Ubin on Clearing and Settlement of Payments and Assets: Project Ubin began in 2016 as a collaborative effort among MAS, the Singapore Exchange, ten banks, eight technology companies, and six academic institutions. Phase 1 of Project Ubin successfully demonstrated that banks are able to transact with one another on an Ethereum-based prototype without going through MAS. Phase 2 of Project Ubin successfully achieved decentralized netting of payments in a manner that preserved transactional privacy, using three different blockchain platforms. Phase 3 of Project Ubin, which was completed last year, demonstrated that tokenized digital currencies and securities assets on different blockchain networks could be simultaneously exchanged, reducing risks for transacting parties. The model can be applied to any form of tokenized assets, including physical assets where property titles or ownerships are recorded on a blockchain platform. Phase 4 of Project Ubin to extend the application to cross-border payment and settlement is ongoing. This is where the real pain point is and the potential payoff highest. In Phase 4, Project Ubin has been linked up with Project Jasper by Bank of Canada, to test out possible models of cross-border, cross-currency payments across two different blockchain platforms. If successful, this will help bring about significant improvements in efficiency, cost, speed, and risk management in cross-border payments. The technical work has been completed and a project report on this will be published soon. The grand vision in the payment and settlement space is a blockchain based system that allows 24/7 cross-border transactions that can be settled in close to real-time.
TradeTrust and Global Trade Connectivity Network Project on Trade and Trade Finance: Given the complexity of trade networks, blockchain experiments in this space have tended to focus on single use-cases. Strong public-partnerships among government agencies, port authorities, logistics and supply chain companies, and financial institutions will be critical in driving adoption in the trade space. Singapore’s TradeTrust project is a step forward in the digitization of paper-based trade documents using blockchain technology. TradeTrust is led by the Info-communications and Media Development Authority (IMDA), in partnership with Maritime and Port Authority of Singapore and is supported by Singapore Customs and the Singapore Shipping Association. The replacement of paper-based documents with electronic documents verified on the blockchain will improve the flow of trusted data across transacting parties and enable increased automation of trade processes. This will not only improve the efficiency of the trading and logistics sectors, but also create opportunity for the financial sector, especially in cross-border trade finance. The key to unlocking this value lies in the ability to operate across jurisdictions and across platforms. MAS is working with HKMA to develop the Global Trade Connectivity Network as a cross-border infrastructure to digitize and facilitate trade and trade finance. As banks are plugged into the network, documentary trade finance could become more digitized and securing of trade finance could become faster, more efficient, and transparent.
In conclusion, he reiterated the potential of blockchain technology and emphasized that Singapore is one of the leading blockchain centers in the world. "Singapore is a great place where you can collaborate, experiment, and scale," said Mr. Menon.
Keywords: Asia Pacific, Singapore, Banking, Securities, PMI, Blockchain, Fintech, Project Ubin, Trade Finance, Global Trade Connectivity Network, HKMA, MAS
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