New Report by Accenture, MAS and ABS Shows How Blockchain Technology Could Improve Central Bank Payment Systems

Accenture, the Monetary Authority of Singapore (MAS) and The Association of Banks in Singapore (ABS) have published a report today that illustrates how blockchain technology could significantly improve the kinds of payment systems that currently enable banks around the world to transfer trillions of dollars per day to each other and help them manage their financial liquidity.

The report is based on the results of a successful prototype involving nearly a dozen major banks and three leading blockchain technology platforms that were tested in parallel. The test confirmed that real-time gross settlement (RTGS) functionalities such as gridlock resolution and a liquidity-saving mechanism on a decentralized system work. Real-time gross settlements are large-value interbank payments of cash or securities that require immediate settlement. Crucially, the test proved, perhaps for the first time, that blockchain-based designs can also effectively preserve privacy in such transactions.

According to the report, a blockchain-based system could also help mitigate interbank payment risks by increasing system resiliency through the removal of a single point of failure and providing cryptographic security, immutability and real-time processing.

Project Ubin: Phase 2 Outcomes 

The report is based on the outcomes of Phase 2 of Project Ubin, which was managed and delivered by Accenture. The 13-week project was led by MAS and ABS, with participation from 11 financial institutions. It explored the use of blockchain technology for specific RTGS functions, including the feasibility of decentralizing liquidity saving mechanisms, while maintaining privacy in banking transactions.

Accenture leveraged the blockchain capabilities of the Accenture Liquid Studio in Singapore to develop three prototypes by three workstreams on three different blockchain platforms: Corda, Hyperledger Fabric and Quorum. The prototypes successfully demonstrate that key RTGS functions, such as fund transfer, queueing mechanisms and gridlock resolution can be achieved through a variety of techniques and solution designs.

The report indicates that a blockchain-based RTGS system would reduce the costs and resources of day-to-day operations and eliminate the risk of the central bank becoming a single-point-of-failure in a systemic disturbance.

Divyesh Vithlani, Accenture managing director, financial services ASEAN said: “Ubin Phase 2 not only successfully proves that RTGS functions can be decentralized without compromising privacy, but also marks a major industry-wide collaborative success in Singapore, laying the foundation for future industry innovations.”

“This innovative collaboration with MAS and ABS demonstrates the value that blockchain can unlock in the settlement of payments,” said David Treat, managing director in Accenture’s global blockchain practice.  “We are excited about what can be achieved in the upcoming phases and the opportunity to demonstrate blockchain’s potential to support additional types of financial transactions and cross-border connectivity.”