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The details of the blockchain research conducted by the central bank of Singapore emerged

The details of the blockchain research conducted by the central bank of Singapore emerged

The details of the blockchain research conducted by the central bank of Singapore emerged

Monetary Authority of Singapore Unveils Three-Phase Plan to Connect World’s Central Banks Using Distributed Ledger Technology.

A project called “Ubin” includes 2 phases; it will allow central banks to carry out cross-border transactions in real time via the blockchain.

Unlike the existing system, in which only critical transactions are processed in real time, the Ubin project will allow you to instantly send any cross-border transactions.

By tokenizing the world’s currencies and protecting the data of each transaction with zero-knowledge confirmations powered by Intel’s Software Guard Extension or other tools in development, the new self-executing smart contract system can increase both the speed and security of international transactions..

But the Ubin project, which is being developed in partnership with banking consortium R3 and banks such as Bank of America Merrill Lynch, Credit Suisse, JPMorgan and Mitsubishi UFJ Financial Group, goes beyond ordinary payments..

Project history

The first six-week phase of the project officially ended on December 23, 2016, as the bank reported in a white paper issued on March 9, 2017.

The 44-page document was co-written with Deloitte. It details the success of tokenizing the Singapore dollar (SGD) using distributed ledger technology. In particular, it is said about how, when building a prototype based on Ethereum, the corresponding experience of R3 was used, which had already been developing a similar project together with a Canadian bank. The previous project was called Jasper.

The paper shows how the Monetary Authority of Singapore (MEPS +) Highly Important and Urgent Payment System can be linked to Real Time Gross Settlement (RTGS) to increase the efficiency of processing payments sent by different parties to each other using online wallets..

Looking for solutions

The second phase of the project is underway.

It is being conducted to further research the prototype, and its main goal is to improve the process of processing transactions relative to the existing system, in which payments are added to the queue and accepted for mutual offset (netting) using “classical algorithms”, according to a representative of the Monetary Authority.

This process is called “congestion acceleration”: the central actor has full access to all transactions, which allows him to calculate the net amount. However, in the second phase of the Ubin project, if it turns out to be successful, everything can change..

The second phase is divided into 3 stages. The project is now in the first phase of the second phase, during which it is studying the mechanics of smart contracts, according to a representative.

To bridge the gap between expectations of distributed ledger technology to enable real-time transaction processing and periodic netting, a team of eight part-time workers and two full-time interns is exploring the possibilities of zero knowledge confirmations, secure multilateral computing such as MIT’s Enigma project, Intel’s Software Guard Extension (SGX) technology, and Microsoft’s cryptlets.

The second step involves investigating the possibilities of integrating the platform with various CSDs, including Singapore’s own SGX, which is controlled by the Monetary Authority..

If all goes well, the third step is to distribute the cryptocurrency to other central banks..

Central bank blockchains

The Monetary Authority intends to perfect the scalability and privacy of distributed ledger technology, thus moving away from the idea of ​​decentralizing certain central bank tasks using blockchain a few months ago, which was actively promoted last year..

Last August, BNY Mellon, Deutsche Bank, Santander and UBS announced plans to create their own “operating coin”. Although this proposal was supposed to tokenize assets based on a distributed ledger, it was largely controversial, since, in the first place, it represented central bank money, and not decentralized assets on the blockchain..

In recent months, the Bank of Canada and the Bank of England have publicly announced the existing limitations of blockchain technology and distributed ledgers, which do not allow them to be effectively used to process significant volumes of transactions with the degree of protection that banks need..

Going forward, the Monetary Authority research group intends to reconcile policy issues related to the conversion of the Singapore dollar to a central bank digital currency (CBDC) and the potential impact of such changes on monetary policy..

A background document is being prepared for release, which will outline the trajectory of the project.


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