It’s one small step for a coin, one giant leap for coin-kind…
Thursday morning, Canadian and Singapore central banks are celebrating the first successful cross-border exchange of its kind between two national central bank blockchain systems.
The transaction, which is referred to as the Jasper-Ubin project, establishes new ground for the potential of blockchain technology to act as a fundamental facilitator of cross-border payments.
A strangely enumerated press release this morning talked about distributed ledger technology and how these types of payments can make international transactions more efficient and transparent:
“Cross-border payments today are often slow and costly. They rely on a correspondent banking network that is subject to counterparty risk, inefficient liquidity management, and cumbersome reconciliation. The Bank of Canada and MAS have been collaborating in the use of Distributed Ledger Technology (DLT) and central bank digital currencies to make the cross-border payment process cheaper, faster, and safer.:”
The vehicle for this transaction was hashed time-locked contracts, in which agreements are enforced by a ledger with a set expiration time.
Government officials are enthused about the use of new technology to refine the process of sending money between central banks.
“The world of cross-border payments is complicated and expensive: our exploratory journey into the use of DLT to try to reduce some of the costs and improve traceability of these payments has yielded many lessons,” said Bank of Canada Senior Special Director Scott Hendry in a press statement. “The importance of international cooperation through projects such as this one cannot be underestimated. 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.”
Private industry heads are also commenting on the exchange:
“Central bank digital currency, tokenisation, and distributed ledger technology are key enablers for the future of financial systems,” said David Treat, Managing Director and Global Blockchain Lead at Accenture, which was a party to the transaction system. “The successful outcome of the Jasper-Ubin project is a big milestone for the modernisation of cross-border, cross-currency transactions. This collaboration between central banks, industry participants and technology experts has shown that material transformation is possible and that the challenges can be overcome.”
Look for more innovation to come quickly as central banks ponder blockchain utility. Earlier in the sea change toward new fintech goals, some naysayers conflated blockchain with crypto coin holding. It’s much more than that – but both parts of the ecosystem tend to benefit one another. If you’re an investor, remember that.