The Monetary Authority of Singapore (MAS) on March 9 announced the successful conclusion of the proof-of-concept project to conduct domestic inter-bank payments using distributed ledger technology (DLT).

First announced in November 2016, the project was carried out in partnership with DLT company R3 and a consortium of financial institutions, including Bank of America Merrill Lynch, Credit Suisse, DBS, HSBC, J.P. Morgan, Mitsubishi UFJ Financial Group, OCBC Bank, Singapore Exchange (SGX) and UOB, as well as BCS Information Systems acting as the project technology provider.

The project has achieved the objectives of producing a digital representation of the Singapore dollar for interbank settlement, testing methods of connecting bank systems to a DLT, and making the MAS electronic payment system (MEPS+) inter-operate with the DLT for automated collateral management.

The consortium has commissioned Deloitte to produce a report that covers the aspects of DLT that are most suited to settlement systems and details the design principles used for the prototype.

MAS has plans for two spin-off projects that will leverage the lessons of the inter-bank payments project. The first project, driven by SGX, focuses on making the fixed income securities trading and settlement cycle more efficient through DLT. The second project focuses on new methods to conduct cross-border payments using central bank digital currency.

MAS is in the early stages of discussions to develop links from Singapore to other countries using DLT to allow cross-border payments to settle directly using central bank accounts.

In December 2015, Standard Chartered, DBS and Infocomm Development Authority announced the completion of a proof of concept delivering the world’s first application of DLT to enhance the overall security of trade finance invoicing.

The initiative, leveraging DLT, is described to reduce risk around duplicate invoice financing for banks while preserving client confidentiality. It allowed banks to convert invoices into digital assets on a distributed ledger, giving the participants the ability to access a single source of information for the status of invoices seeking financing across all the participating banks.

This is done by utilizing DLT as a means to prevent duplicate financing of the same invoice by different banks.

Photo courtesy of The Monetary Authority of Singapore.