Canada, Singapore central banks trial cross-border blockchain payments

Central banks in Canada and Singapore have successfully sent funds via a cross-border blockchain transaction, in the first trial of its kind ever held by central banking authorities.

The Monetary Authority of Singapore, the de facto central bank of Singapore, teamed up with the Bank of Canada for the pilot transaction, which saw the banks link their existing experimental blockchain infrastructure to facilitate the transaction.

The success is all the more remarkable that the banks had joined payment networks built on two different DLT technologies, Project Ubin and Project Jasper.

The project was conducted with support from Accenture and JP Morgan, and was developed on the Corda infrastructure. Scott Hendry, Bank of Canada Senior Special Director, Financial Technology, said the trial could lead to reduced costs and improved traceability in central bank payments in future. He noted:

“The world of cross-border payments is complicated and expensive: our exploratory journey into the use of DLT to try to reduce some of the costs and improve traceability of these payments has yielded many lessons.

“The importance of international cooperation through projects such as this one cannot be underestimated. Only through continued collaboration and fundamental research will it be possible for this technology to mature and for policy-makers to fully understand its potential.”

Sopnendu Mohanty, Chief FinTech Officer of the Monetary Authority of Singapore, said the next focus was on global central bank cooperation around distributed ledger technology.

“The next wave of central bank blockchain projects can make further progress by bringing technology exploration together with policy questions about the future of cross-border payments. It is challenging work, and we welcome other central banks to join us in this global collaboration, to bring benefit to consumers, businesses and the broader financial industry,” he explained.

Cross-border blockchain payments allow parties to transfer funds with quicker, at a lower cost and with more accountability, amongst the many other advantages afforded by the technology.

With the first transaction now hailed a success, no doubt more central banks will be looking at their own blockchain research more closely.