A consortium led by the Monetary Authority of Singapore (MAS) and the Association of Banks in Singapore (ABS) has developed software prototypes of three different models for decentralised inter-bank payment and settlements with liquidity savings mechanisms.

The project marks the Phase 2 of Project Ubin, a collaborative initiative to explore the use of distributed ledger technology (DLT) for clearing and settlement of payments and securities. It has been conducted in collaboration with 11 financial institutions, including Bank of America Merrill Lynch, Citi, Credit Suisse, DBS Bank Ltd, HSBC Limited, J.P. Morgan, Mitsubishi UFJ Financial Group, OCBC Bank, Singapore Exchange, Standard Chartered Bank, and United Overseas Bank.

Five technology companies also contributed to the project. Accenture managed and developed the prototypes; R3, IBM, and ConsenSys were engaged to provide support on the respective DLT platforms of Corda, Hyperledger Fabric, and Quorum; while Microsoft supported the deployment of the prototypes on Azure Blockchain.

Existing netting programmes rely on a single payment queue visible to the operator to find offsetting payments. Decentralising the queue has the potential to expose payment details to an unauthorised party. The software models developed in Project Ubin achieve a superior combination of decentralisation and privacy. They are amongst the first in the world to implement decentralised netting of payments in a way that preserves transactional privacy.

“A key outcome of the consortium’s effort is the ability to perform netting while protecting the privacy of transactions. This helps to open up opportunity for a wider adoption of DLT-based settlement systems,” Sopnendu Mohanty, Chief FinTech Officer, MAS, said.

Accenture will publish a report on the project findings and details of the prototypes developed during the Singapore FinTech Festival, to be held from 13 to 17 November. The report will aid central banks and financial institutions in understanding the platform characteristics and design considerations of commonly used DLT platforms.

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