The Singapore Fintech Festival yesterday played host to a quartet of distinct cross-border and digital currency payment initiatives, drawing in United Overseas bank, Grab, Ripple and the country's central bank.
The Monetary Authority of Singapore set the tone for the day, joining with the bank of Canada and Bank of England to release a report which assesses alternative models that could enhance cross-border payments and settlements. The report examines existing challenges and considers alternative models that could in time result in improvements in speed, cost and transparency for users.
The project involved collaboration among the three central banks, who were supported by a group of financial institutions led by HSBC. Contributors included Oversea-Chinese Banking Corporation, The Toronto-Dominion Bank (TD), United Overseas Bank (UOB) and Payments Canada. It builds on previous research projects such as Project Jasper by the Bank of Canada and Project Ubin by the Monetary Authority of Singapore, which explored tokenised forms of central bank liabilities for domestic transactions.
The report examines three models of cross-border payments. The first two are built on existing domestic interbank payment systems using traditional technology. The third model focuses on the use of Wholesale Central Bank Digital Currency (CBDC) and its various applications through distributed ledger technology. The models could be used to improve access, speed and transparency of cross-border payments. However, the report finds that further work would be required, by both industry and regulators, if the models were to be developed further. Future areas of focus could include implementation and policy challenges.
Scott Hendry, Bank of Canada senior special director, financial technology, says: “There is significant room for improvement in the cross-border payments space. Major changes are being proposed by current service providers as well as start-ups that regulators need to research to better understand. This project was a major step forward in international cooperation and in our understanding of the possible alternatives.”
Earlier this week, MAS and the Singapore Exchange (SGX) provided an update on a successful Proof of Concept demonstrating Delivery versus Payment capabilities for the settlement of tokenised assets across different blockchain platforms. The next exploratory step will see MAS and Bank of Canada link their respective blockchain platforms to explore the possibility of instant, 24/7 settlement of cross-border payments transactions.
Elsewhere at the Festival, a two-day Workshop on Digital Currency Economics and Policy co-organised and funded by the Asian Bureau of Finance and Economic Research (ABFER) , the National University of Singapore Business School and MAS concurred with the positive views expressed a day earlier by IMF managing director Christine Lagard on the value of a state-backed digital currency movement.
In the opening speech, ABFER's Professor Rogoff assessed the potential for digital currencies in the context of the costs and benefits of society’s use of cash. After weighing the pros and cons, as well as the challenges involved in valuing them, he argues that digital currencies may have a future as regulated, central-bank issued currencies, rather than private ones.
United Overseas bank, meanwhile, used the event to demonstrate a successful Proof of Concept trial of a real-time P2P cross-border payment service between accounts linked to the account-holders’ mobile phone numbers. The PoC conducted multiple funds transfers between a UOB Singapore account and a UOB Thailand account in real time.
Ride-hailing Grab was next up, showcasing the roll out of a remittance offering covering all six Asean markets under its financial services arm. Set for launch in 2019, the wallet-to-wallet remittance product will bear down on a market estimated to be worth somewhere north of $70 billion.
Finally, CIMB, Asean’s fifth largest bank announced plans to join RippleNet to enable instant cross-border payments conducted with other members of the blockchain network.
Ripple is being deployed across CIMB’s proprietary remittance product SpeedSend for cross-border payments both inbound into Asean and outbound to other countries. It has already been used to open up payment corridors to Australia, USA, UK and Hong Kong.