The Bank of Canada (BoC) and the Monetary Authority of Singapore (MAS) conducted a successful experiment on cross-border and cross-currency payments using the blockchain technology and the central bank digital currency (CBDC).
According to a press release , this is the first such test between two central banks. It demonstrated a great potential for applying new technology to improve efficiency and reduce the risk of cross-border payments, the statement said.
During the experiment, BoC and MAS linked their own blockchain projects, Jasper and Ubin, which are built on different platforms – Corda R3 and Quorum JPMorgan, respectively. Project teams used a method called Hashed Time-Locked Contracts (HTLC) to connect the two networks and make the settlement “Payment vs. Payment 2” (PvP) without the need for a trusted intermediary.
Technical support for the Jasper-Ubin project was provided by JPMorgan and Accenture, which participated in the development of relevant blockchain projects in Canada and Singapore.
“The world of cross-border payments is complex and expensive. Our experience in using distributed registry technology (DLT) to try to reduce some costs and improve payability brought many lessons , ”said Scott Hendry, Senior Special Director for Financial Technologies at BoC.
Central banks published a report on the Jasper-Ubin project, in which they described the technical implementation of the HTLC method and possible limitations and problems in its application. They also suggested areas of research on the mechanisms of interconnection of DLT and alternative network models, and encouraged central banks, financial institutions and fintech companies for further cooperation.
“The importance of international cooperation in such projects cannot be underestimated. Only through continuous collaboration and fundamental research will this technology become mature, and policy makers will be able to fully understand its potential , ”added Scott Hendry.
The Central Bank of Canada has been implementing the Jasper blockchain project, aimed at interbank payments, since 2016 and last October successfully completed its third stage. MAS, the de facto Central Bank of Singapore, is also working on a blockchain for payments under the Ubin project.
Publication date 03/05/2019
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