Technological innovations continue to break new ground in the financial services industry. But one area that remains uncharted is safe cross-border payments. Is this now possible using distributed ledger technologies (DLT)?
To find answers, the Bank of Canada (BoC) and the Monetary Authority of Singapore (MAS) embarked on a collaborative journey that aimed to conduct cross-border and cross-currency payment using two different DLT platforms and central bank digital currencies.
The project builds on the earlier work of two prominent global blockchain projects—Project Jasper by BoC and Project Ubin by MAS. With Accenture’s support, the two banks linked up their projects Jasper and Ubin, which are built on two different DLT networks: Corda and Quorum, respectively.
The result: MAS successfully transferred Singapore dollars issued on a Singaporean Quorum network to BoC on a Canadian Corda network. BoC received the same amount converted to Canadian dollars.
Safe passage with HTLC
This pioneering work, as detailed in the report “Jasper-Ubin Design Paper: Enabling Cross-Border High Value Transfer Using Distributed Ledger Technologies,” underscores the possibility to process international payments without relying on a trusted intermediary. It also establishes that payments can jump across different DLT platforms. In which case, DLTs could herald a bold new future for a safer and easier way to send money compared to conventional payment methods.
What powered the success of the Project-Ubin experiment? It used Hashed Time-Locked Contract (HTLC), a cryptographic technique, to move assets across different networks in an all-at-once or not-at-all way. This means the payment is returned to the sender if the receiver fails to acknowledge the receipt of payment before a deadline.
For this reason, HTLC can be a mechanism for facilitating real-time transactions and simplifying the complex payment processes. It demonstrates how two parties could set up contracts without the need for a third-party intermediary.
For more information on this and what lies ahead, download the full report. Reach out to us to discuss the report or how we can help your business apply the new technologies of tomorrow, now.