Bank of Canada and MAS perform first blockchain cross-border payment

The Monetary Authority of Singapore (MAS) and the Bank of Canada have performed the first blockchain cross-border payment using central bank digital currencies and distributed ledger technology (DLT).

Following the transaction, the value of which hasn’t been disclosed, the central banks have jointly published a report that proposes different design options for cross-border payment systems, highlighting possible limitations and challenges.

Both banks have been experimenting with their own proprietary digital coins and distributed ledgers which they linked up using what it calls hashed time-locked contracts.

The blockchain-based tech that comes out of these projects is centralized, private, and obscured from public view, much like JP Morgan’s JPMcoin, which received mixed reviews.

Project Jasper-Ubin

MAS’ experimental domestic payment network, Project Ubin, was linked up with its Canadian counterpart’s Project Jasper, as part of the test done in partnership with Accenture and JPMorgan Chase.

“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,” Sopnendu Mohanty, Chief FinTech Officer at the MAS, said in the statement. “Together, these projects have addressed many technical questions and brought the technology to a higher level of maturity.”

Project Jasper and Project Ubin run on privatized implementations of Corda and Quorum respectively.

David Treat, global blockchain lead for Accenture, called the test a big milestone for the modernization of cross-border, cross-currency transactions.

Collaboration is the value proposition

While those behind the technology say it may make could make cross border payments cheaper, faster and safer, others are less convinced about the transaction’s real achievements and whether it’s actually a game changer, but the collaboration has been welcomed.

Charlie Barling, an Independent Treasury Professional said on Twitter: “As delightful as this might seem, there is much mention of the collaborative effort (between trusted parties), use of smart contracts (in the loosest sense), interoperability between different platforms, tokenised forms forms of central bank digital currencies (wholesale), and network messaging systems.

“It is then alluded to in the paper that this is not to be seen as a centralised approach (It’s certainly not decentralised). So hardly a game changer if one is honest. The value proposition is clearly in the collaboration.”

“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,” said Scott Hendry, the Bank of Canada’s senior special director of financial technology.

The growth of eCommerce and mCommerce has resulted in a dramatic rise in the need for cross-border payments, according to Christoph Tutsch, Founder and Managing Director of ONPEX and every business needs to have access to banking without borders to survive in our ever-globalised environment. This has culminated to the first blockchain cross-border payment.