Canada and Singapore central banks carried a fruitful experiment on Blockchain technology for international payments. This is a first-time trial run among two central banks in the world, reported on May 2.
Two banks, Canada central bank and Monetary Authority of Singapore (MAS) used blockchain technology for international payments. As a result, the banks increased efficiency and reduced the risk of payment solutions.
Safer, Cheaper and Faster
At present, cross-border payment is costly and very risky. This will depend on so many matters of banks. They are corresponding bank network, liquidity management, risk, insufficient funds, and proper communication. So, two banks, Bank of Canada plus MAS used Distributed Ledger Technology (DLT) with central banks’ digital currencies. This blockchain technology will make payments safer, cheaper and faster.
Absence of the Third Party
The two banks have linked their banking networks successfully. These networks based on Blockchain technology. As a result, two central banks are making cross-border payments without any third party.
Highlights and Limitations
The two banks, Canada central bank, and MAS, jointly released a report of payment experiment. This report explains the implementations, possible limitations, highlights and challenges of blockchain technology.
Footprints for other Banks
Sopnendu Mohanty, the Chief Fintech Official of MAS, reported that this new technology is more efficient than previous projects. This technology tested and questioned in different ways, and finally, it brought in a higher level. The blockchain technology implementation is a challenging task. Even though, the two banks encouraged other banks to implement and join in the one world collaboration.
The report also suggests that still so many researches will be done on DLT and their network models. This technology further collaborates with FinTech companies, central banks, and financial institutions.
The Canada central bank and MAS both encourages further central banks to implement this technology. As well as, all banks work together and make cross-border payments cheaper, faster and better.
Cooperation of Banks
Scott Hendry, Financial Technology Special Director of Canada Central bank, says that international payments are very complicated. The cross-border payments are expensive and not traceable. Blockchain technology is a solution to all problems.
Today, international banks cooperation is necessary for global payments. It can’t underestimate and so all banks work with collaboration.
Blockchain technology is key and enables a better financial system in the world. It will bring a major milestone among central banks in the area of cross-border payments.
