First Time Canadian Central Bank Completed Cross-Border Payment with DLT

The joint association for the trial of cross-border and cross-currency payments between the Bank of Canada and the Monetary Authority of Singapore (MAS) got successful while deploying digital ledger technology (DLT). The authorities mutually announced through an update on 2nd May.

 With the increasing demand of blockchain technology because of it’s innumerable benefits for the generations to come, it is certainly important for the forward-looking countries to highlight the benefits with the real-time use cases. With the aid of this joint initiative, people would get rid of the present cumbersome reconciliation, counterparty risk, and inefficient liquidity management process.

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As per the information,

“In order to reduce the slow, costly, and riskier cross border conventional payment system, the two central banks of the advanced nations completed the trial for the first time.”

To make this initiative successful both the central banks BOC and MAS combined their respective domestic projects which are built on two separate DLT platforms i.e., Project Jasper and Project Ubin. Both the teams of the different payment networks jointly experimented with the technique named “Hashed Time-Locked Contracts” (HTLC)- it is the payment process that uses two different time lock methods which are hash locks and timelocks to set the time constraint on the contracts which are meant for both the parties,  so that the receiver of a payment either acknowledge receiving the payment prior to a deadline by generating cryptographic proof of payment or forfeit the ability to claim the payment, which will return back to the payer. The team further connected the HTLC payment process with the two payment networks which allowed the “Payment versus Payment2 (PvP) settlement and in a way finishing the dependability and the role of the trusted and riskier third party to act as an intermediary.

The announcement also referred the partnership of Canadian network Jasper and Singapore network Ubin with Accenture which is responsible for the development of project Jasper on Corda and J.P. Morgan is carried out project Ubin on Quorum, correspondingly.

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The broadcast also revealed the link of the joint report of BOC & MAS titled “Jasper-Ubin Design Paper” for people to understand the technicalities, implementation and how the joint efforts of the nations helped to overcome the challenges of HTLC model.

It is extremely crucial to highlight the thoughts and opinions of the senior authorities of the industry who are aware of the imperfections of the present status quo and working towards the important international collaborations to provide the better financial stability to the citizens while using the new technologies.

“The complicated and expensive world of cross-border payments need to be updated and changed: the fact-finding and experimental journey of  DLT in the use case is to reduce the expenses and improvise the tracking system of these payments. The trial has certainly produced imperative education”.

Scott Hendry BOC Senior Special Director, Financial Technology conveyed through the document.

“For the modernization of cross-border, the successful experiment of the Jasper-Ubin project is a big milestone, cross-currency transactions.” Said, David Treat, Managing Director, and Global Blockchain Lead, Accenture.

Head of Digital, Asia Pacific, Treasury Services, J.P. Morgan, Naveen Mallela, said,

“J.P. Morgan will continue to invest in relevant technologies to improve the payment experience which would be efficiently scalable and secure for the clients.”

Being at the forefront of blockchain innovation the collaboration with MAS and the financial community is one of the prime focus of the company to provide quality services.

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In an effort to create awareness and being a supporter of blockchain technology, Sopnendu Mohanty, Chief FinTech Officer, MAS, clearly highlighted the importance of collaborations and associations with other central banks of the different countries and invited them to take the challenging work to bring the DLT technology to a higher level of maturity and progress together.