Singapore’s central bank is ready to use the blockchain for inter-bank payments

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The Monetary Authority of Singapore (MAS) announced today it has completed a proof-of-concept trial of using distributed ledger technology (DLT – of which the blockchain is a type) to power domestic inter-bank payments. The announcement was made during the Money20/20 Asia press conference.

The project was announced in November 2016, in collaboration with distributed ledger technology company R3 and a consortium of several international banks including Bank of America Merrill Lynch, Credit Suisse, and J.P. Morgan, and Singaporean banks and financial institutions DBS, OCBC, UOB, and the Singapore Exchange.

See: Here’s how Singapore’s central bank is bringing fintech to the real world

The central bank says it achieved its three goals for this project: create a digital representation of the Singapore dollar for inter-bank settlement, test methods of connecting bank systems to a distributed ledger, and get the MAS Electronic Payment System, known as MEPS+, to work with the DLT for automated collateral management.

Next, MAS wants to try to improve investment trading and settlement periods with the help of DLT. It also wants to take payments using digital currency cross-border. It’s currently talking to other countries to enable digital currency payments to be settled through central bank accounts.

MAS has been thoroughly exploring financial technology applications to make sure the Lion City can be a world-class fintech hub.

In fact, the IFZ FinTech Study 2017 study (PDF link) by the Lucerne University of Applied Sciences and Arts found that Singapore ranks first in the world in terms of the right conditions (political/legal, economic, social, and technological) for fintech to grow.