A pilot project testing cross-border payments using blockchain technology, gives assurance that it can speed up transactions and save money for users, MAS and Temasek say.

Cross-border payments could become faster and cheaper if market participants embrace blockchain distributed ledger technology, Singapore’s main financial regulator, and Temasek sovereign wealth fund, said as they wrapped up a pilot test.

The Monetary Authority of Singapore and Temasek have concluded the fifth and final phase of Project Ubin – a trial network to demonstrate how blockchain could transform financial networks.

“As with all innovation adoption, there is a time for experimentation, and a time for commercialisation. Project Ubin has worked with the financial industry and blockchain community on a journey of experimentation, prototyping and learning. This has built a strong foundation of knowledge, expertise and experience, and paved a path towards commercial adoption,” Sopnendu Mohanty, chief fintech officer, MAS, said.

Blockchain is traditionally associated with the digital currency Bitcoin, although this technology is also seen as applying more widely to areas such as exchange of legal, medical and other information for business. Bitcoin remains controversial because some policymakers fear it is a conduit for questionable money. Defenders say it challenges monopolistic monetary systems which are increasingly unsustainable while blockchain leaves an audit trail.

MAS and Temasek commissioned Accenture, the professional services firm, to write the report. Among its findings, were that an international settlement network for multi-currency payments, modelled on Project Ubin, “could enable faster and cheaper transactions than conventional cross-border payments channels”.

“The commercial applications of the payments network prototype include cross-border payments in multiple currencies, foreign currency exchange, settlement of foreign currency denominated securities, as well as integration with other blockchain-based platforms to enable end-to-end digitalisation across many industries and use cases,” the report, published on the MAS website, said.

(Editor's note: That Singapore's official bodies are promoting research into distributed ledger technology in this way is instructive. The Asian city-state has put technology innovation front and centre of how it presents its face to the world. Over half a decade ago, this news service remembers how Credit Suisse chose the jurisdiction as the first place to launch a mobile private banking set of tools. Singapore knows that technology is going to be a big differentiator in the battle of financial hubs. With Hong Kong distracted by domestic politics from the mainland, Singapore clearly wants to build an edge. We will be looking further at this in coming weeks and months.)