The very recent block chain initiative in Singapore through Project Ubin has been developed wherein a multi phase payment system has been created which connects the Singaporean dollars to digital tokens.
Advantages of using Block chain banking
As the system has been newly developed, many would not know what does the block chain do and how it is beneficial to the users. Therefore, let us understand how it would be beneficial to the country. For the banks, the block chain would help them in creating a more reliable and efficient payment system while the customers would be benefited with eradication of lengthy processing times while exchanging currencies, having unwanted mediators and eliminating processing fees. As per the Project Ubin, the main objective of the payment system would be “to evaluate the implications due to digital token system with potential advantages to the financial ecosystem of Singapore”. The other aim is “to reduce the costs and risk attached with cross border settlements related to securities and payments”.
Collaborators and Partners of the Block chain
The central bank of Singapore, the Monetary Authority of Singapore (MAS) which is also the regulatory authority for finance collaborated with consulting company Delloite and three other local banks for developing the multi phase payment system. There are several banks, which are being partners to the project namely DBS Bank, Bank of America Merrill Lynch, The Hongkong and Shanghai Banking Corporation Limited, Credit Suisse, J.P. Morgan, OCBC Bank, Mitsubishi UFJ Financial Group, Singapore Exchange and United Overseas Bank.
Phases of the Ubin project
The foundational phase of the project took place last year in duration of 6 weeks from 14th November to 23rd December. The first phase assessed the implications and the feasibility of the project. The project started off with payments within the banks with the help of block chain technology.
It was derived that banks benefited more by using the technology, as it was able to reduce the internal system issues, avoid cross border risks and payments, improving monitoring regulators and avoided frauds. At the end of Phase 1, it was concluded that there was performance improvement in terms of accuracy, safety and speed.
The coming phases of the project would deal with international payments in different currencies and mitigate risks related to it. The phase 2 will supposedly emphasise on Delivery versus payment records, which will help in evaluating the use of block chain technology in Govt securities. The other focus would be on payment versus Payment, which would be developed further more for domestic as well as international payment systems.
Comparison with Project Jasper of Canada
The Project Ubin when was announced started getting comparisons from a similar kind of project started in Canada named Project Jasper earlier in the year 2016 in the month of March. The main aim of the Project Jasper was to develop the proposal of a model for the Bank of Canada using the Block Chain technology.
All the structure and learning from Project Jasper indeed laid a foundation of the Project Ubin in Singapore. The prototype in the first phase was inspired from the monetary model of Project Jasper which it was further developed in new Smart Contract codebase.
Implication of Project Ubin for Singapore
If the project Ubin turns out to be successful one then it would create a milestone for being first ever Asian digitalised currency system. However, this would mean proper planning and keeping in mind some of the important aspects such as interaction model, infrastructural settings, pivotal management decisions and verification of Smart Contracts.
The MAS wishes to have technological innovations especially in the financial sector. Project Ubin is termed to be the major opportunity for the country to be a leading nation with regards to R&D of Block chain technology meeting their end goal of being a Smart Financial centre in the world.
Revolutionary yet Ideological Clash
The Smart Contract Block chain technology is termed to be a revolutionary one as it was originally created to destruct the financial system and is now being used to bring a revolution. The block chain technology offers advantages such as efficiency, accuracy, speed, reliability but this possesses an ideological clash among many revolutionary idealists and corporate using block chain technology.