The Bank of Canada and the Monetary Authority of Singapore have exchanged digital currency in a first-of-its-kind direct cross-currency purchase between central banks on a blockchain platform. The two institutions connected their independent distributed ledger networks with the support of Accenture and JPMorgan. Hashed time-locked contracts were used for a payment vs payment settlement, which only allows one transaction to take place if the other goes through. In order to make this happen, both parties had to agree that they would use the same cryptographic hash algorithm as part of an agreement known as a “smart contract.”
The Bank of Canada and the Monetary Authority of Singapore have exchanged digital currency in a first-of-its-kind direct cross-currency purchase between central banks on a blockchain platform. The two institutions connected their independent distributed ledger networks with the support of Accenture and JPMorgan. Hashed time-locked contracts were used for a payment vs payment settlement, which only allows one transaction to take place if the other goes through. The trial represents a step forward in cross-border digital currency payments, whose overhaul many banks see as a focus for more efficient business interactions across multiple regulatory markets.