Singapore Reveals Plans for Central Bank-Issued Cryptocurrencies

Project Ubin could strongly affect how central banks process transaction amongst themselves.

The Monetary Authority of Singapore (MAS) has announced Project Ubin, its plan to use distributed ledger technology to connect central banks around the world.

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Currently, the system only allows the settling of institutionally crucial or high valued transactions in real time. Project Ubin, contrarily, has set itself the goal of making the process happen nearly instantly, both payment and security-wise.

The new system is designed to execute smart contracts by tokenizing international currencies, and protecting client privacy with zero-knowledge proofs and Intel’s software guard extension.

Project Ubin is being established in partnership with banking consortium R3, Bank of America Merrill Lynch, JPMorgan, Credit Suisse, and Mitsubishi UFJ Financial Group.

In Depth Look at Project Ubin

The first phase of the six-week project was concluded on December 23, 2016, followed by a formal announcement and publication of a white paper co-written by Deloitte on March 9, 2017. The white paper served as an account of Project Ubin’s process of tokenizing the Singaporean dollar, and the lessons taken from Project Jasper in Canada and R3 joint efforts of building an Ethereum based prototype.

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The paper also spoke of how the system serving MEPS+, MAS’ high valued and urgent transactions, can be connected to the real-time gross settlement system (RTGS) to enhance the efficiency between various digital wallets.

The second phase, which is now underway, is where the prototype research will delve deeper into the process to improve how transfers are settled compared to the current system. The current system creates queues and netting of the transactions via “classical algorithms”, according to a MAS representative.

In addition, the available ‘gridlock solution’ demands a single party to have an overarching view of any and all transfers in order to find the net sum.

In order to explore the ability of distributed ledger technology to settle gross transactions in private and in real time, a team is focusing on the use of an MIT Enigma Project’s secure multi-party computation, zero-knowledge proofs, Intel’s software guard extension (SGX), and Microsoft cryplets. In the second stage, the goal is to identify the best fitted platform to be integrated with different central securities entities such as banks, including Singapore’s SGX overseen by the MAS. Step three will expand the cryptocurrencies issued by digital banks to other central banks.

MAS has been the latest financial entity to jump on the distributed ledger technology bandwagon, following in the footsteps of Deutsche Bank, BNY Mellon, UBS, and Santander that revealed their plans for a settlement coin back in August 2016.

Future plans include validating policy questions regarding the potential conversion of the Singapore dollar into a digital currency issued by the bank, as well as its effect on the monetary policy. In addition, a consultation paper on the matter will be published at a later stage to make the direction of the project clear.

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