By Guest Author – Kate Yong, Australia
Announced in 2016 by Monetary Authority of Singapore (MAS), Project Ubin is an exploration and trial of blockchain also known as distributed ledger technology (DLT). The name Ubin is derived from a tiny island off the shore of Singapore known for being one of the last places in the city-state that is conserved from urbanization. It is then quite an apt project name for the early days of blockchain with success leading to the commercialization of this trial. The ultimate goal for all stakeholders is to put the Singapore Dollar on a blockchain.
Project Ubin will be divided into five phases and powered by the partnership of MAS with R3, which is a Distributed Ledger Technology company along with a selected consortium of financial institutions including the likes of The Hongkong and Shanghai Banking Corporation Limited, Bank of America Merril Lynch, Credit Suisse, and Singapore Exchange (SGX) and with BCS Information Systems covering technology products and architecture. Phase 1 of the project is domestic inter-bank payments using a central bank issued SGD equivalent and has been successfully completed on 9 March 2017.
Deloitte was commissioned to produce a report detailing the design principles utilized in the prototype and providing understanding. The reports found that the foundation for blockchain was based on these three innovations: –
- Peer-to-peer networks allowing decentralization and the end of a privileged third party.
- Public key cryptography allowing strong verification of digital identity.
- Consensus algorithms allowing validation of data’s authenticity.
Announcement was made on 5 October 2017 that software prototypes have been successfully developed from Phase 1 leading to the kickoff of Phase 2. The new phase will compare the new system powered by tech with the existing system. Three primary platforms will be focused here namely JPMorgan’s ethereum-based Quorum that is also associated with Accenture and Association of Banks in Singapore (ABS), R3’s Corda, and Hyperledger’s Fabric. The success of Phase 2 could lead to central banks being obsolete in their role as centralized infrastructure operator.
Public access has been enabled for source-codes and technical documentations under Apache License, Version 2.0 to encourage experimentation and innovations. Spin-off projects are anticipated in the future phases by leveraging on the prototypes developed which includes enabling a more efficient fixed income securities trading and settlement cycle on the SGX as well as enabling new ways in cross border payments through usage of a central bank digital currency.
All in all, this development goes to serve the broader goals of Singapore to be a Smart Financial Centre. The chief fintech officer of the MAS, Sopnendu Mohanty who is also the co-chair for Project Ubin is driving these changes with aims to take it globally. He wants to instill the believe that experimentation’s with new technology are positive. While regulators around the world continue to attempt managing the rise of cryptocurrencies, interest in this area will only rise.
