Last year, the Monetary Authority of Singapore (MAS) and state investment firm Temasek announced that Project Ubin, its blockchain-based multi-currency payments network, has demonstrated its commercial potential after tests with more than 40 financial and non-financial firms. Planned uses include foreign currency exchange, faster, less costly cross-border transactions, and smart contracts for escrow and trade.
Project Ubin paves the way for better collaborations with central banks and other financial institutions to develop better cross-border payments networks.
The Phases of Project Ubin
Phase 1: Tokenised SGD
Launched a proof-of-concept project to conduct inter-bank payments using Blockchain technology. Phase 1 was successfully concluded on 9 March 2017.
Phase 2: Re-imagining Real-time Gross Settlement (RTGS)
Developed software prototype of three different models for decentralized inter-bank payment and settlements with liquidity savings mechanisms.
Phase 3: Delivery versus Payment (DvP)
Developed Delivery versus Payment (DvP) capabilities for settlement of tokenized assets across different blockchain platforms, allowing financial institutions and corporate investors to carry out real-time exchange and final settlement of tokenized digital currencies and securities assets, improving operational efficiency and reducing settlement risks. The project demonstrated that DvP settlement finality, interledger interoperability, and investor protection could be achieved through blockchain-led solutions.
Phase 4: Cross-border Payment versus Payment (PvP)
The MAS, together with The Bank of Canada (BoC), Bank of England (BoE), jointly published a report on 15 November 2018 which assesses alternative models that could enhance cross-border payments and settlements. The report examines existing challenges and considers alternative models that could result in improvements in speed, cost, and transparency for users.
Phase 5: Enabling Broad Ecosystem Collaboration
The project’s final phase explored the development of the multi-currency payments model to provide connectivity interfaces for other blockchain networks to connect and integrate seamlessly. The work in this phase also explored the value of a blockchain-based payments network for wholesale banking purposes.
The next leap – Partior
Following the close of Project Ubin, DBS, J.P. Morgan, and Temasek are leading the development of a digital multi-currency payments platform to reimagine and accelerate value movements for payments, trade, and foreign exchange settlement in a new digital era, through a newly-established technology company.
The future
The Phase 5 completion will mark the end of Project Ubin, a five-year journey of experimentation on blockchain technology with the industry and assessing how it could be applied to settlements and payments. The team received strong and continuous support from the industry across the 5 phases and appreciated all participants that have shared a part of the journey.
The payments network prototypewill continue to serve as a test network to collaborate with other central banks and the financial industry for evolving next-generation cross-border payments infrastructure.
Technical specifications for the connectivity and functionality interfaces of the project Ubinprototype network are publicly available to spur further industry development. Participants are encouraged to look at how they can leverage the learnings to produce meaningful applications that benefit them and their customers.
As clearly observed and documented, CBDCs and, by extension Project Ubin are definitely a step in the right direction. They offer diverse benefits such as enhanced financial inclusion by serving underbanked communities, boosting the effectiveness of monetary policy, and freeing up concentration and credit risk in third-party payment systems.
