What seemed to be extremely far-fetched just a few years ago, is now a reality.
The Bank of Canada and the Monetary Authority of Singapore, sent each other digital currencies using blockchain technology, marking the first such transaction between two central banks, according to a Bloomberg report published May 1, 2019.
Central Banks Want Cheaper, Faster, and Safer Cross-Border Transactions
According to a joint statement, the two central banks have been in collaboration using distributed ledger technologies (DLT) and central bank cryptocurrencies to facilitate faster, safer, and cheaper cross-border payments.
The Bank of Canda aligned their experimental domestic payment network, Project Jasper, with Singapore’s distributed ledger payments network, Project Ubin, to test cross-border blockchain payments. According to the Bloomberg report, the banks’ tests were done in partnership with Accenture and JPMorgan Chase & Co.
Sopnendu Mohanty, Chief FinTech Officer at the MAS, made a statement on the banks’ achievement:
“Project Jasper and Project Ubin have built on previous innovations in the payments area to demonstrate that cross-border payment and settlement can be made simpler and more efficient. Together, these projects have addressed many technical questions and brought the technology to a higher level of maturity.”
Central Bank Blockchain Collaboration
The two central banks have jointly published a report on cross-border settlement systems, outlining different design options and shining light on the possible limitations and challenges of DLT for cross-border payments.
According to Scott Hendry, the Bank of Canada’s senior special director of financial technology, they will continue to collaborate with the Monetary Authority of Singapore to establish a viable blockchain solution for cross-border payments.
Hendry expanded:
“Only through continued collaboration and fundamental research will it be possible for this technology to mature and for policymakers to fully understand its potential.”
Why don’t these central banks just use a tried and tested cross-border DLT solution like one of Ripple’s products including XRP? Let us know what you think in the comment section below.
