INSITE - Singapore - 27 Dec 2023

SINGAPORE LAYS FOUNDATION FOR DIGITAL CURRENCY

Summary: The Monetary Authority of Singapore (MAS) has introduced three initiatives to ensure the safe and innovative use of digital money in the country. These include creating the infrastructure for a digital Singapore dollar, expanding digital money trials, and issuing a "live" Central Bank Digital Currency (CBDC) for wholesale settlement. MAS is promoting three types of digital money: wholesale CBDCs, tokenized bank liabilities, and regulated stablecoins.

In Detail: Singapore is progressing toward introducing its CBDC, primarily for wholesale settlement. The MAS has revealed three key initiatives to promote the secure and innovative use of digital money in the country. These initiatives include a blueprint for the necessary infrastructure for a digital Singapore dollar, an expansion of digital money trials, and a proposal to issue a "live" CBDC for settling retail payments between banks. The MAS aims to promote three types of digital money: wholesale CBDCs, tokenized bank liabilities, and regulated stablecoins.  

The initial initiative, named the Orchard Blueprint, serves as a comprehensive guide for establishing the essential infrastructure to facilitate digital money transactions in Singapore. This blueprint is structured around several crucial components:

• Settlement ledger - to record digital money transfers, with supporting features such as 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 specify the conditions for digital money use.  

• Name Service - to translate between unwieldy wallet addresses and alternative name identifiers that are readable and meaningful for verification. 

To test the broad applicability of PBM and digital money in Singapore, MAS will expand Project Orchid’s digital money trials on tokenised bank liabilities, wallet interoperability, supplier financing, and institutional payment controls.

To support ongoing digital money trials in the financial sector for both retail and corporate users, MAS plans to start developing CBDC for wholesale interbank settlement in the coming year. The first pilot will involve the actual issuance of wholesale CBDCs, moving beyond previous simulations conducted in test environments. This initial pilot aims to use "live" wholesale CBDCs to settle retail payments between commercial banks, with potential future trials exploring the use of "live" wholesale CBDC for cross-border securities trade settlements.

Key Links: https://www.mas.gov.sg/news/media-releases/2023/mas-lays-foundation-for-safe-and-innovative-use-of-digital-money-in-singapore