Reuters: Monetary Authority of Singapore announces launch of blockchain pilot project for interbank payments

Translation: Lydia

The Monetary Authority of Singapore recently announced that it will launch a pilot project with the domestic stock exchange and eight local and foreign banks to use blockchain technology to conduct interbank payments, including cross-border foreign currency transactions.

Speaking at the Singapore Fintech Festival, Monetary Authority of Singapore managing director Menon Weng said the project is supported by R3 Blockchain Research Lab and BCS Information Systems (BCSIS).

“In the pilot system, banks will deposit cash with the HKMA as a deposit in exchange for the digital currency issued by the HKMA,” Meng Wenneng said.

MAS Trial:

Banks will pledge cash as collateral in exchange for a digital currency issued by the central bank. Participating banks can pay each other directly with this digital currency, rather than first sending payment instructions through MAS. Banks can then redeem the digital currency for cash.

This move is the first step in the week after MAS announced its cooperation with the R3 Alliance on blockchain technology research and development.

The participating banks include Bank of America Merrill Lynch, The Bank of Tokyo-Mitsubishi UFJ, Ltd, Credit Suisse, DBS Bank Ltd, The Hongkong and Shanghai Banking Corp Ltd, JPMorgan Chase & Co., OCBC Bank, Singapore Exchange and United Overseas Bank.

Monetary Authority of Singapore Director-General: Menon

Originated from the digital currency Bitcoin, blockchain is an electronic transaction processing and recording system that allows parties to track information across a secure network without the need for third-party verification.

“The next phase of this project will involve foreign currency transactions, which may require support from another central bank,” Meng Wenneng told the bankers and technology company executives.

Meng Wenneng said that Singapore also announced the creation of an international "KYC (Know Your Customer)" platform to eliminate the complex customer data collection of banks and reduce compliance costs. The system will collect and verify the personal information of Singapore residents.

This is the first step taken by the Monetary Authority of Singapore to expand the application of digital currency.

The Monetary Authority of Singapore has launched a "regulatory sandbox" to allow financial institutions and fintech players to trial and test business models and products in an environment that is not subject to legal regulation.

Singapore is one of the world's major financial centers and authorities have been working to attract investment in the fintech sector, relaxing regulations and setting up special units to support the industry.