Blockchain technology is one of the primary points of focus for financial institutions to date. Singapore is one of the regions where blockchain adoption is really thriving right now. A proof of concept to establish cross-bank payments using distributed ledger technology is currently in development, showing the country’s desire to revamp finance above anything else.
Cross-Bank Blockchain Payments Make A Lot of Sense
Unlike what most other financial institutions aim to achieve, the Monetary Authority of Singapore plans to make their blockchain solutions interoperable between banks. Rather than having every bank work on its own proprietary blockchain, a unified system is direly needed. Together with the R3 consortium and other local financial institutions, development of this new project is currently underway.
R3 unveiled their fintech centre of excellence focusing on blockchain not too long ago. It is clear that this distributed ledger technology idea has gotten a foothold among bankers around the world. Singapore wants to position itself at the centre of blockchain innovation in the financial sector, and this new initiative only bolsters the earlier efforts.
It is rather interesting to see Singapore create its very own blockchain consortium, though. Other countries have done the same in recent months, which goes to show that there is a growing need for localized efforts. Among the consortium members are the Bank of Tokyo-Mitsubishi UFJ, Credit Suisse, OCBC Bank, and a few others.
Little information has been made available at this time regarding this new project. It appears that the participants will deposit cash as collateral with the Monetary Authority of Singapore. Doing so will reward deposits with MAS-issued digital currency. Additionally, it is expected that the transfer and trade of foreign currency will be enabled in the future.
MAS Chief Fintech officer Sopnendu Mohanty told the media:
“The simplification of processes that comes from having a single and coherent, distributed record of information makes blockchain technology an attractive solution for the financial sector. MAS is engaging with the industry and working closely with our partners to explore innovative payment solutions.”
Blockchain technology is touted as the way to make financial transactions more transparent, faster, and cheaper. Depending on how this proof of concept plays out, future projects related to cross-border transfers will be established. Exciting times are ahead for blockchain and fintech in Singapore, that much is certain.
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