By Nayela Deeba
Nov. 25, 2016
Developing Blockchain and Digital Currency
Since inter-bank payments can be time-consuming and costly, MAS, the Singapore Exchange and eight banks will work on a proof-of-concept project to use blockchain technology for inter-bank payments, including cross border transactions in foreign currency.
"Under the pilot system, banks will deposit cash as collateral with MAS in exchange for MAS-issued digital currency. Participating banks can pay each other directly with this digital currency instead of first sending payment instructions through MAS. Banks can later redeem the digital currency for cash," Menon explained.
The banks will also have the option of using an existing common payments gateway provided by BCS Information Systems for blockchain transaction. This saves them the hassle of rewriting their back-end systems, Menon said.
"In an industry facing the headwinds of lower economic growth and heavier regulatory burdens, innovation must be the way to refresh and re-energise the business model," he concluded.