The Singapore central banks says: "This project could potentially avail a payment system for participants to transact in different global markets round-the-clock that are today limited by time zone differences and office hours."

R3 last week announced plans to to open a blokchain centre of excellence on the island at Lattice80, a huge, brand new fintech centre built by investment house MarvelStone group.

Members of the Singaporean consortium include Bank of America Merrill Lynch, The Bank of Tokyo-Mitsubishi UFJ, Ltd, Credit Suisse, DBS Bank Ltd, The Hongkong And Shanghai Banking Corporation Limited, JP Morgan, OCBC Bank, Singapore Exchange, United Overseas Bank and BCS Information Systems as a technology provider to the project.

Under the pilot, banks will initially deposit cash as collateral with the MAS in exchange for MAS-issued digital currency. A later phase will see the banks use the system to transfer foreign currency, "possibly with the support of another central bank".

MAS believes the technology has the potential to make financial transactions and processes more transparent, resilient and at lower cost. It says the outcomes from the POC will provide guidance on future projects such as cross border payments, automation of securities issuance, and trading and settlement.

Sopnendu Mohanty, chief fintech officer, MAS, says: “The simplification of processes that comes from having a single and coherent, distributed record of information makes blockchain technology an attractive solution for the financial sector. MAS is engaging with the industry and working closely with our partners to explore innovative payment solutions.”

Earlier this week, OCBC Bank carried out a pilot using blockchain technology to transfer funds between its subsidiaries in Singapore and Malaysia.