The central banks of Singapore and Canada have sent each other digital currency using the blockchain network, co-created by both the countries. The transaction was part of two separate projects being pursued by both the countries: the Bank of Canada’s (BoC) “Project Jasper” and the Monetary Authority of Singapore’s (MAS) “Project Ubin”.
The BoC has been working on their blockchain network with the help of academics and the private sector. The research initiative is to understand the distributed ledger technology (DLT) and how it can be used in high-value inter-bank payments. Starting in 2016, project Ubin also centers around understanding the applications of DLT in the banking system. Before the test, both MAS and BoC, along with the Bank of England in November of 2018, published a report about the potential of blockchain in cross-border payments. The chief Fintech Officer for MAS Sopenendu Mohanty while talking about the project said:
“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”.
The transaction was made possible with the help of JP Morgan, an American multinational bank, and the accounting giant Accenture. Both the companies are currently developing their blockchain based payment system. The companies had a vital role in the project and in their summary paper MAS and BoC thanked them and said:
We want to express our appreciation to JP Morgan and Accenture for their contribution to this pioneering work and endeavor.
JP Morgan Chase and the Future of Cross-border Banking
JP Morgan Chase, commonly known as JPM, is United States’ biggest bank with more than 2.62 trillion dollars in assets. The bank has had its history with cryptocurrency. In 2017, at the awakening of the bitcoin revolution, Jamie Dimon, the CEO of JPM, called bitcoin a fraud. However, the CEO has changed his tone now as he has been seen praising bitcoin and the technology behind it, blockchain. The bank has even invested millions of dollars in creating its own blockchain platform. The company’s Inter-bank Information Network is an industry leader in the Fintech world. The network helps to transfer payments through mutually accessible ledgers. Up till now more than 75 banks from all around the world have already joined the venture.
A joint summary report was also released by BoC and MAS that talked about the future of cross-border transactions and how the experiment was a proof of the fact that blockchain has the potential to change the global financial system. It states:
” The Jasper-Ubin project is experimental in nature, and whether we will eventually use blockchain technology for high-value cross-border payments remains to be seen. Technology exploration and experimentation will continue because we see potential in this technology. More importantly, cross-jurisdictional collaborations must continue, as the development of common shared understanding will benefit the global ecosystem regardless of the technology that we eventually choose to use”.