Three initiatives were presented by the Monetary Authority of Singapore (MAS) to guarantee the inventive and secure use of digital money in Singapore.
The three initiatives for digital money in Singapore:
- A plan to issue a “live” central bank digital currency (CBDC) for wholesale settlement;
- A blueprint detailing the infrastructure needed for a digital Singapore dollar, and
- An expansion of digital money experiments
Wholesale CBDCs, tokenised bank liabilities, and regulated stablecoins are the three types of digital currency that MAS is pushing.
MAS released the Orchid Blueprint, which lays out the technological framework that would eventually be needed to support digital currency transactions.
Drawing from the industry trials of Project Orchid, the plan specifies the following infrastructure building blocks to support the responsible usage of digital money in Singapore:
- Settlement ledger – to keep track of digital money transfers, with features like native programmability and atomic settlement of digital tokens;
- Tokenisation bridge – to connect existing account-based settlement systems with ledgers compatible with tokenised forms of digital money;
- Programmability protocol – to use Purpose Bound Money (PBM) as a common protocol to establish the conditions for the use of digital money, and
- Name Service – to translate between unwieldy wallet addresses and alternative name identifiers that are readable and meaningful for verification.
MAS plans to extend Project Orchid’s digital money experiments in order to evaluate the wider applicability of PBM and digital money in Singapore.
In order to investigate pertinent infrastructural elements and business models, four additional trials involving industry participants will be conducted:
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- Tokenised bank liabilities;
- Wallet interoperability;
- Supplier financing, and
- Institutional payment controls.
Furthermore, MAS will start developing CBDC for wholesale interbank settlement, an addition to the financial industry’s trials of digital money including both corporate and retail customers.
After modelling issuance in test conditions, MAS will now engage in its first trial of the “live” issue of wholesale CBDCs.
“Live” wholesale CBDC settlement of retail payments between commercial banks will be the first test project’s application. Use of “live” wholesale CBDC for cross-border securities trade settlement may be one of the test projects in the future.
Ravi Menon, managing director of MAS, stated: “The ‘live’ issuance of central bank digital money for use as a common settlement asset in payments is a significant milestone in MAS’ digital money journey that began in 2016. The issuance of wholesale CBDC reinforces the role that central bank money plays in facilitating safe and efficient payments.”
Leong Yung Chee, head of blockchain and digital assets, UOB, added: “We are excited to work with MAS to unlock the potential of Purpose Bound Money (PBM). Our fungibility trial with OCBC will showcase that UOB-issued tokens are fungible with other bank tokens, with interbank settlement done through Wholesale Central Bank Digital Currency (CBDC) on the backend. The industry is working closely with the government. When we have a fungible, secure and convenient Digital Singapore Dollar, ultimately consumers will be the biggest beneficiaries as they will enjoy more options when it comes to digital and cashless payment.”