The Monetary Authority of Singapore (MAS) announced that it is partnering R3, a Blockchain technology company and a consortium of financial institutions on a proof of concept project to conduct interbank payments using Blockchain technology.
In very simple terms 'Blockchain' forms the technology foundation of digital currency Bitcoin. On its 'Twitter' handle R3 describes itself as a financial technology company, which represents the biggest shared effort of bringing blockchain technology to the financial markets.
A press release issued by MAS stated that this project could potentially avail a payment system for participants to transact in different global markets around the clock that are today limited by time zone differences and office hours.
The project will develop a pilot system in which Blockchain infrastructure is used to issue and transfer funds among participants. Such a system will also be more resilient against stoppages by decentralizing and distributing the software that records and validates payments. Participants can depend on the immutable record of transactions at the heart of the Blockchain to reduce the cost of long-term record keeping
In short, Blockchain technology has the potential to make financial transactions and processes more transparent, resilient and at lower cost. The outcomes from the project will provide guidance on future projects such as cross border payments, automation of securities issuance, trading and settlement using Blockchain technology.
This will also help MAS and the industry to develop simpler to use and more efficient alternatives to today’s Systems. The consortium includes Bank of America Merrill Lynch, The Bank of Tokyo, Mitsubishi UFJ, Ltd,Credit Suisse, DBS Bank Ltd, The Hongkong And Shanghai Banking Corporation Limited, JP Morgan, OCBC Bank, Singapore Exchange, United Overseas Bank and BCS Information Systems as a technology provider to the project.
Sopnendu Mohanty, Chief FinTech Officer, MAS, said: “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.”