Canada and Singapore Test Central Bank-backed Cryptos for Cross-Border Payments

The Bank of Canada and the Monetary Authority of Singapore (MAS) have announced successfully conducted transfers of central bank-backed cryptos using blockchain.

Photo: Bank of Canada / Flickr

Photo: Bank of Canada / Flickr

The Bank of Canada and the Monetary Authority of Singapore (MAS) have reported they have successfully conducted digital currency transfers with the usage of blockchain technology. In this pilot test, central bank-backed crypto assets were used to clear cross-border and cross-currency payments.

According to the official statement of MAS, central bank digital currencies have real capacities to increase the efficiency of international transactions and to minimize the risks associated with them. They also highlighted that it was the first initiative of this kind that was realized by two central banks.

The pilot tests were carried out on the Distributed Ledger Technology (DLT), which means that the used network has such peculiarities as scalability and large transaction capacity. The banks used their blockchain platforms, Project Jasper and Project Ubin, that were linked together in Hashed Time-Locked Contracts (HTLC).

It’s obvious, the successful experiment is not only an important accomplishment for these banks but for the entire crypto industry as well. It is a sign of the growing interest from the side of banks in blockchain technology and crypto as the technologies that can be efficiently used for cross-border payments.

Speaking about their experiment, Scott Hendry, Bank of Canada Senior Special Director, Financial Technology, stated:

“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. […] 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.”’

Cryptos in Banking Industry

It is expected that MAS will continue collaborating with the central banks globally in the nearest future. Their conjunctive work will be aimed at developing blockchain-powered projects that will be able to improve cross-border payments settlements for banks and their clients.

Sopnendu Mohanty, Chief FinTech Officer of MAS, supposes:

“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.”

Moreover, the largest global organizations, the International Monetary Fund (IMF) and the World Bank, have also taken a decision to explore the crypto world and launched a private blockchain and a quasi-cryptocurrency. The ‘Learning Coin’ is aimed at discovering blockchain to understand deeper the potential of the technology.

Given all these, we can expect that this engagement of major banks into digital assets and blockchain will help businesses and individuals be more open to the emerging tech and the new classes of assets.

Just for a reminder, some months ago financial giant JPMorgan released its own digital asset called JPM Coin.

Now, they say from JP Morgan that the bank will work together with MAS to execute transactions at scale.

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