A consortium of banks and technology vendors led by the Monetary Authority of Singapore (MAS) and The Association of Banks in Singapore (ABS) have successfully developed software prototypes of three different models for decentralised inter-bank payment and settlements with liquidity savings mechanisms.
First unveiled in November, Project Ubin is a MAS-led initiative to see how DLT can be used for the clearing and settlement of payments and securities, specifically the use of a tokenised form of the Singapore dollar on a distributed ledger.
The work builds on a similar Bank of Canada-led and R3-backed effort, called Project Jasper, which used a digital currency to enable interbank payments.
The Singapore central bank says the three software models developed in Phase 2 of Project Ubin are amongst the first in the world to implement decentralised netting of payments in a manner that preserves transactional privacy.
Existing netting programmes used in inter-bank payments rely on a single payment queue visible to the operator to find offsetting payments. Decentralising the queue, however, potentially exposes payment details to an unauthorised party.
"The latest models in Project Ubin achieve a superior combination of decentralisation and privacy," says MAS.
Accenture, which was appointed to manage and develop the prototypes, intends to publish a report on the outcomes in November.
Sopnendu Mohanty, chief fintech officer, MAS, says: “A key outcome of the consortium’s effort is the ability to perform netting while protecting the privacy of transactions. This helps to open up opportunity for a wider adoption of DLT-based settlement systems. We are sharing our learnings and knowledge from Project Ubin to encourage greater experimentation amongst central banks and financial institutions. We look forward to working with other central banks on the use of DLT for cross-border applications.”