Singapore's Central Bank to Test Blockchain-Backed Digital Currency

Blockchain consortium startup R3CEV and eight major banks are said to be participating in the forthcoming trial.

AccessTimeIconNov 16, 2016 at 12:30 p.m. UTC
Updated Sep 11, 2021 at 12:37 p.m. UTC

The Monetary Authority of Singapore (MAS) will soon test how it could issue digital currency using a blockchain-based interbank payment system.

According to Bloomberg, the planned proof-of-concept will be supported by blockchain consortium R3CEV, as well as eight banks and an unnamed local stock exchange. The Development Bank of Singapore, HSBC, Bank of America, JPMorgan, Credit Suisse and Bank of Tokyo-Mitsubishi are all said to be participating.

In a speech on Wednesday, MAS managing director Ravi Menon said the test could come to include other central banks. Further, he credited the bank's desire to remove cost and friction from traditional bank transactions as the motivation for the effort.

Menon said:

"Today, banks have to go through correspondent banks to intermediate these payments. It takes time and adds to cost. This project marks the first step in MAS's exploration of ways to harness the potential of central bank-issued digital currency."

Bloomberg reports the trial would find banks depositing cash as collateral with MAS, which would then issue a digital currency to participants. The digital currency could then be exchanged among participants in the system and later redeemed for cash.

The forthcoming trial bears similarities to a previously announced effort from UBS, Deutsche Bank, Banco Santander and startup Clearmatics in August.

Called Utility Settlement Coin, the project envisioned how a central bank could issue digital currency that could then be redeemed for cash held by a central bank.

Singapore dollars via Shutterstock

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Trending

1
CoinDesk - Unknown
El Salvador compra 80 bitcoins adicionales a $19K cada uno, según el presidente Bukele

La última compra del país centroamericano había sido en mayo.

CoinDesk - Unknown
2
CoinDesk - Unknown
Brutal Month for Bitcoin as June Ends With Biggest Drop in 11 Years

Crypto markets saw heavy losses with investors increasingly worried about high inflation and Federal Reserve rate increases. Some analysts say the bitcoin price could go even lower.

CoinDesk - Unknown
3
CoinDesk - Unknown
Ignite CEO Peng Zhong Announces Departure Shortly After Re-Organization

Zhong’s exit comes weeks after the company’s former CEO, Jae Kwon, said he is re-joining the company as the CEO of spinoff New Tendermint.

CoinDesk - Unknown
4
CoinDesk - Unknown
DAOs Are the New Way of Impact Work

"Impact DAOs" are at the forefront of a new culture of work that asks us to move towards aligning our values with our actions, says the co-founder of Gitcoin.

CoinDesk - Unknown