Singapore MAS Launches 4 Fast Trials For Retail CBDC

The first stage of the Project Orchid of the Monetary Authority of Singapore (MAS) is now complete, which was aimed at examining the case of a retail central bank digital currency (CBDC).

On October 31st, the white paper was released by the MAS, which said that the city-state did not have any urgent case for developing a retail CBDC.

However, the study did envision the infrastructure that would be required in the event that a retail CBDC is needed.

The study

A new model was also conceptualized for digital currency, which is purpose-bound money, and it involved several government agencies and large banks in Singapore in the research through a number of trials.

The authors of the white paper said that due to the high quality of services that are currently available in Singapore, consumers do not have any need for a retail digital dollar.

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However, they did indicate that the most foreseeable use case they could identify would actually benefit the MAS instead of the users.

The authors said that Singapore already has widespread electronic payments and households and companies transact digitally in a secure, fast and seamless manner already.

It said that the need for a retail CBDC could surface over time if there are any innovative uses, or if it turns out that digital currencies are being used as a local medium of exchange.

Programmable payment and money

The purpose-bound money (PBM) is devised by the MAS through the concept of programmable payment and programmable money.

The former means that payments are executed automatically once certain conditions are met and the latter means the medium of exchange has rules embedded that define its usage constraints.

The PBM highlights the conditions that determine the use of an underlying digital currency. The authors of the white paper asserted that this non-intermediated and constrained kind of CBDC would be suitable for vouchers.

The trials

The FinTech Festival in Singapore is starting on November 2nd and will continue until November 4th and it will involve four trials.

DBS Bank said that it would launch a pilot program that would allow it to issue digital Singapore dollars boasting smart contract capabilities.

The Open Government Products office would enable these and people would be able to use them for instant settlements, saving the processing time involved.

This pilot project involves six merchants and one thousand consumers. It is the largest bank in Singapore and said that the Community Development Council scheme would use the PBM.

This scheme is responsible for providing vouchers to households in Singapore for counteracting the high cost of living and inflation.

Commercial vouchers will be issued by other financial institutions, which can be used for disbursing government funds to those who do not have bank accounts, providing financial training providers with grant money, or at the festival itself.

A wholesale central bank digital currency (CBDC) has also been under research in Singapore since 2016. However, this white paper was the first step that the MAS has taken in terms of a retail CBDC.

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