Bank of Canada and Singapore Financial Watchdog Exchange Digital Currency on Blockchain

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Bloomberg reports on May 2, 2019, that the Bank of Canada and Monetary Authority of Singapore (MAS) have successfully sent each other digital currencies using blockchain technology. This marks the first instance of such a transaction between two central banks.

A Big Milestone 

In a bid to leverage distributed ledger technology (DLT) in the cross-border and cross-currency payments sector, the Bank of Canada and the MAS conducted the first ever blockchain-powered international digital currency transfer between two central banks.

In a joint statement, the banks said that they have often collaborated on the use of DLT and central bank digital currencies (CBDC) to make international payments and remittances cheaper, faster, and safer.

The trial was executed on top of Bank of Canada’s in-house blockchain network Project Jasper which was linked with the MAS’ own DLT pilot, Project Ubin.

Consulting companies Accenture and JPMorgan Chase & Co., who previously supported the development of the Canadian network on Corda and the Singapore network on Quorum, were also part of the test transaction.

According to Sopnendu Mohanty, Chief FinTech Officer at the MAS, the two pet blockchain projects – Project Jasper and Project Ubin – have been tested several times in the past and helped propel DLT to a higher level of maturity.

He said:

“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.”

Adding:

“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.”

The two central banks have also published a joint report that highlights the possible advantages and disadvantages of blockchain technology in the field of cross-border payments. The report proposes several design-structures and payment settlements systems that could help benefit the multi-trillion dollar industry.

Accenture blockchain lead, David Treat, dubbed the bilateral digital currency trial “a big milestone for the modernization of cross-border, cross-currency transactions.”

Are CBDC’s the Future of Money?

For long, world organizations and financial institutions have put their weight behind government-backed CBDCs as an alternative to cryptocurrencies which are exponentially harder to regulate.

BTCManager reported on November 15, 2018, how the International Monetary Fund (IMF) chief, Christine Lagarde urged central banks to consider issuing digital currencies. However, no central bank has yet taken much interest in launching the same.

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