Singapore proposes a blockchain to speed up cross-border payments • The Register

Singapore proposes a blockchain to speed up cross-border payments • The Register

The solution to costly, slow and inefficient cross-border payments is the implementation of industry-led stable blockchain transactions and multi-currency platforms, Ravi Menon, managing director of the Monetary Authority of Singapore (MAS), said on Monday.

“The current state of cross-border payments is not suitable for the twenty-first century,” announce Menon, explaining that cross-country money transfers are currently based on an “old network of counterparty banks” that costs users a global average of 6.4 percent of the total transfer value.

Menon’s remarks were made at Sibos 2022 – the financial services conference hosted by the Society for Worldwide Interbank Financial Telecommunication (SWIFT). SWIFT facilitates many international financial transactions, which makes Menon’s comments embarrassing to say about his host.

Menon didn’t just hurl insults. He also made three recommendations on how to create a more efficient, affordable and inclusive cross-border payment experience: connect faster systems, build a common platform that connects multiple central bank digital currencies (CBDCs), and expand blockchain-based payment networks for the private sector.

Singapore is linking its existing domestic payment system – a scheme that circumvents sharing of bank details called PayNow – with similar systems in Thailand, Malaysia and India, to make such transactions faster.

But since such efforts to link individual countries to cross-border payments are burdensome, the debtor country is also developing a central platform for multilateral links. Project Nexus is one such effort, pledging to erase a transaction in less than a minute over a 24-hour period for just 3 percent of the transfer value fee.

While platforms like Project Nexus are expected to solve some problems, it’s not a panacea. First, the slow nature of the settlement processes remains to be addressed. The current settlement process involves sending payments through a series of correspondent banks with different settlement cycles and can only be made sequentially, often requiring days to complete.

Menon said that the solution to this dampening feature is a cross-platform CBDC, which will provide a distributed ledger to support synchronous settlement. But CBDCs have their own challenges – such as security, access, and regulation – so Menon suggested a FinTech-led blockchain as another path forward.

“Security-backed stablecoins or token bank deposits issued by private players can also be used to enable cheaper and faster cross-border payments and settlement,” the director said. MAS exec made it clear that he is not referring to private cryptocurrency – Singapore officials have spent a lot of time iron against Hash crypto in particular, cryptography with fiat currency reliability is preferred.

“Security-backed stablecoins or tokenized bank deposits issued by private actors can also be used to enable cheaper and faster cross-border payment and settlement,” the manager argued. He also noted that Visa is integrating popular stablecoins into local payment services and joint ventures that use blockchain to reduce payment time to minutes from days.

However, stablecoins are far from the final ingredient as shown by Korean cryptobro Do Kwon Overseeing Terraform Labs’ $40 Billion “Stable” TerraUSD Collapse.

The unfortunate collapse of the Kwon Empire did not completely take MAS off the stablecoin. In August Menon describe it Stable coins as having good potential, if they are “securely backed by high quality and well regulated reserves.” ®

#Singapore #proposes #blockchain #speed #crossborder #payments #Register

Leave a Comment

Your email address will not be published. Required fields are marked *