A consortium in Singapore harnessed blockchain technology for more efficient inter-bank payments.
The Monetary Authority of Singapore (MAS) and The Association of Banks in Singapore (ABS) announced the consortium which they are leading has successfully developed software prototypes of three different models for decentralised inter-bank payment and settlements with liquidity savings mechanisms.
The participating financial institutions are Bank of America Merrill Lynch, Citi, Credit Suisse, DBS Bank, HSBC, J.P. Morgan, Mitsubishi UFJ Financial Group, OCBC Bank, Singapore Exchange, Standard Chartered Bank, and United Overseas Bank.
World First
The three software models developed are amongst the first in the world to implement decentralised netting of payments in a manner that preserves transactional privacy.Existing netting programmes used in inter-bank payments rely on a single payment queue visible to the operator to find offsetting payments.
Decentralising the queue, however, potentially exposes payment details to an unauthorised party. The latest models achieve a superior combination of decentralisation and privacy.
Open to Wider Use
«A key outcome of the consortium’s effort is the ability to perform netting while protecting the privacy of transactions. This helps to open up opportunity for a wider adoption of Distributed Ledger Technology (DLT) based settlement systems,» said Sopnendu Mohanty, chief fintech officer, MAS.
Accenture will publish a report on the project findings and details of the prototypes developed. The report will aid central banks and financial institutions embarking on the use of DLT, in understanding the platform characteristics and design considerations of commonly used DLT platforms.
The report will be published during the Singapore Fintech Festival, which will be held on 13 to 17 November. finews.asia as a media partner to the event will bring further details at that time.
