now loading...
Wealth Asia Connect Middle East Treasury & Capital Markets Europe ESG Forum TechTalk
TechTalk / Treasury & Capital Markets
MAS, New York Fed test wholesale payments
Opportunities to ease cross-border flows, improve settlement outcomes targeted
Tom King 22 May 2023

A test conducted by the Monetary Authority of Singapore (MAS) and the Federal Reserve Bank of New York’s New York Innovation Center (NYIC) on the use of distributed ledger technology (DLT) to improve the efficiency of cross-border wholesale payments and settlements involving multiple currencies has achieved simulated end-to-end payment settlement in under 30 seconds.

The jointly sponsored Project Cedar Phase II x Ubin+ (Cedar x Ubin+) experiment, which built on previous phases of the NYIC’s Project Cedar research and the MAS’ Ubin+ initiative, examined a cross-border multi-currency use case in which vehicle currencies were used as a bridge to exchange currency pairs that are not widely traded.

Specifically, the Cedar x Ubin+ experiment explored the ability of DLT to establish connectivity across heterogeneous simulated currency ledgers, reduce settlement risk and decrease settlement time. It was conducted in a test environment and the hypothetical payments were settled using simulated wholesale central bank digital currencies.

The findings addressed three key pain points related to network interoperability and autonomy, atomic settlement and near-real-time settlement.

Each simulated payment scenario achieved end-to-end settlement in under 30 seconds on average, thus enabling participants to be notified of a payment’s success in a matter of seconds.

The experiment also revealed possible areas of future research and analysis, including the viability of the network solution to manage transaction volumes at scale, with potentially, an increase in payments settled per second and the involvement of additional currencies supported by their corresponding central bank ledgers.

“Cross-border payments are a major railway for facilitating the functioning of the global economy,” says Michelle Neal, head of the markets group at the New York Fed. “Our research collaboration with the MAS reveals key opportunities for central bank innovation to play an important role in easing wholesale payment flows globally and improving settlement outcomes.”

Conversation
Bashar Al Natoor
Bashar Al Natoor
global head of Islamic finance
Fitch Ratings
- JOINED THE EVENT -
6th Global Islamic Finance Issuers and Investors Leadership Dialogue
Marking time as new opportunities emerge
View Highlights
Conversation
Xiaolin Chen
Xiaolin Chen
head of international
KraneShares
- JOINED THE EVENT -
In-person roundtable
Securing the future
View Highlights