Monetary Authority of Singapore Unveils Plans for Digital Money

The Monetary Authority of Singapore (MAS) has unveiled a series of initiatives aimed at ensuring the secure and innovative utilization of digital money in the country.

These initiatives encompass the development of a digital Singapore dollar infrastructure, expanding digital money trials, and the issuance of a “live” central bank digital currency (CBDC) for wholesale settlement, the MAS said in a Thursday (Nov. 16) press release.

MAS is promoting three forms of digital money: wholesale CBDCs, tokenized bank liabilities and regulated stablecoins, according to the release.

The Orchid Blueprint, released by MAS on Thursday, outlines the necessary technology infrastructure to facilitate digital money transactions in the future, the release said. Drawing from the Project Orchid industry trials, this blueprint identifies key building blocks for the sound utilization of digital money in Singapore.

One crucial building block is the settlement ledger, which will record digital money transfers with features like native programmability and atomic settlement of digital tokens, per the release. Another vital component is the tokenization bridge, connecting existing account-based settlement systems with ledgers compatible with tokenized forms of digital money.

Additionally, a programmability protocol will specify the conditions for digital money usage, while a name service will translate wallet addresses into readable and meaningful alternative name identifiers for verification, according to the press release.

To test the applicability of digital money and the programmability protocol, MAS will expand Project Orchid’s digital money trials, the release said.

For instance, OCBC and UOB are investigating the feasibility of accepting tokens issued by one bank for retail payments by another, per the release. Ant International, Fazz and Grab will pilot a program using the programmability protocol to enable Alipay users to make payments to GrabPay merchants.

In addition, Amazon and HSBC are exploring the tokenization of payables from Amazon to merchants, improving access to financing and working capital, the release said. JPMorgan is investigating payment controls to enable institutional clients to hold deposit tokens and transfer them to clients outside the issuing bank’s customer base.

In addition to these trials, MAS plans to develop a CBDC for wholesale interbank settlement next year, marking the first “live” issuance of wholesale CBDCs, per the release. The initial pilot will utilize “live” wholesale CBDCs to settle retail payments between commercial banks, with future pilots potentially including cross-border securities trade settlement.

It was reported in October that the Bank for International Settlements, central banks and traditional financial institutions are in the midst of tackling various ways and means of creating and using tokenized bank deposits.

What remains to be seen is whether those initiatives will define competition, or co-existence, with stablecoins, CBCDs or a combination thereof.