Briefing

Central banks initiate blockchain transaction to swap currency for the first time

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The Bank of Canada (BoC) and the Monetary Authority of Singapore (MAS) successfully linked their respective experimental domestic payment networks—named Project Jasper and Project Ubin—which are built on two different distributed ledger technology platforms. (Bloomberg)

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Talking point: Cross-border payments account for 40 percent of global payments transactional revenues, and international cross-border payments revenues exceeded US$200 billion globally in 2018, according to McKinsey. More than 40 central banks worldwide are currently exploring the use of blockchain technology for faster, low-cost transactions, according to a report from the World Economic Forum (WEF). While blockchain’s scalability and large transaction capacity makes it well-suited for high-value transactions, it’s unclear whether banks will adopt the technology. Blockchain technology increases vulnerability to cybersecurity risks and power outages, the WEF said. But the transaction between the BoC and the MAS—the first of its kind between two central banks—suggests financial institutions may be open to adopting blockchain, despite its shortcomings.