Project Ubin: Central Bank Digital Money using Distributed Ledger Technology

Project Ubin is a collaborative project with the industry to explore the use of Distributed Ledger Technology (DLT) for clearing and settlement of payments and securities. DLT has shown potential in making financial transactions and processes more transparent, resilient and at lower cost. The project aims to help MAS and the industry better understand the technology and the potential benefits it may bring through practical experimentation. This is with the eventual goal of developing simpler to use and more efficient alternatives to today’s systems based on digital central bank issued tokens.

Phase 1: Domestic inter-bank payments using a central bank issued SGD equivalent

MAS announced on 16 November 2016 that it is partnering R3, a Distributed Ledger Technology company, and a consortium of financial institutions on a proof-of-concept project to conduct inter-bank payments using Blockchain technology. The consortium includes Bank of America Merrill Lynch, Credit Suisse, DBS Bank, The Hongkong And Shanghai Banking Corporation Limited, J.P. Morgan, Mitsubishi UFJ Financial Group, OCBC Bank, R3, Singapore Exchange, UOB Bank, and BCS Information Systems as a technology provider to the project.

The successful conclusion of Phase 1 was announced on 9 March 2017. Deloitte was commissioned to produce a report that covers the aspects of DLT that are most suited to settlement systems and details the design principles used for the prototype. The report “Project Ubin: SGD on Distributed Ledger” will serve as an introduction to Distributed Ledger Technology (DLT), and provide an understanding of the prototype developed.

Phase 2

MAS and The Association of Banks in Singapore (ABS) announced on 5 October 2017 that the consortium which they are leading has successfully developed software prototypes of three different models for decentralised inter-bank payment and settlements with liquidity savings mechanisms.

The consortium includes 11 financial institutions and five technology partners. The participating financial institutions are Bank of America Merrill Lynch, Citi, Credit Suisse, DBS Bank Ltd, HSBC Limited, J.P. Morgan, Mitsubishi UFJ Financial Group, OCBC Bank, Singapore Exchange, Standard Chartered Bank, and United Overseas Bank. Accenture was appointed to manage and develop the prototypes. R3, IBM, and ConsenSys were engaged to provide support on the respective DLT platforms of Corda, Hyperledger Fabric and Quorum. Microsoft was engaged to support the deployment of the prototypes on Azure Blockchain.

MAS and ABS announced on 14 November 2017 that the report has been published and the source-codes and technical documentations have been released for public access under Apache License, Version 2.0. Central banks, financial institutions, as well as academic and research institutions are encouraged to tap on the open source-codes to facilitate their experiments, research and innovation.

Delivery versus Payment (DvP)

MAS and Singapore Exchange (SGX) announced on 24 August 2018 that it is collaborating to develop Delivery versus Payment (DvP) capabilities for settlement of tokenised assets across different blockchain platforms. This will allow financial institutions and corporate investors to carry out simultaneous exchange and final settlement of tokenised digital currencies and securities assets, improving operational efficiency and reducing settlement risks. Three companies, Anquan, Deloitte and Nasdaq were appointed as technology partners for this project. They will leverage on the open-source software developed and made publicly available in Project Ubin Phase 2.

The successful conclusion of the DvP project was announced on 11 November 2018. The project demonstrated that DvP settlement finality, interledger interoperability and investor protection can be achieved through specific solutions designed and built on blockchain technology. Following its conclusion, MAS and SGX have jointly published an industry report, which provides a comprehensive view of automating DvP settlement processes with Smart Contracts . The report also identified key technology and operational considerations to ensure resilient operations, and defined a market framework that governs post-trade settlement processes such as arbitration.

Cross-border Payment versus Payment (PvP)

The Bank of Canada (BoC), Bank of England (BoE) and the MAS jointly published a report on 15 November 2018 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 report, “Cross-border interbank payments and settlements: Emerging opportunities for digital transformation”, provides an initial framework for the global financial community to assess cross-border payments and settlements in greater depth. Specifically, it discusses how a variety of payment models could be implemented, from both a technical and non-technical perspective.

The MAS and BoC are now collaborating to develop possible technical solutions to the proposed payment models. This Jasper-Ubin project looks at linking up Project Ubin by MAS and Project Jasper by BoC for cross-border payments.

Future Phases

The next phases of Project Ubin focus on new methods to conduct cross border payments using central bank digital currency.

Last Modified on 24/04/2019