The Monetary Authority of Singapore (MAS) has introduced three pivotal initiatives to ensure the safe and innovative use of digital money within Singapore.
The Orchard Blueprint is the first initiative. It outlines the necessary infrastructure needed to facilitate digital money transactions. This blueprint highlights the infrastructure components necessary for the sound implementation of digital money in Singapore:
- A settlement ledger designed to record digital money transfers, incorporating essential features like native programmability and atomic settlement of digital tokens.
- A tokenisation bridge to connect existing account-based settlement systems with ledger systems compatible with tokenised forms of digital money.
- A programmability protocol using Purpose Bound Money (PBM) as a standard protocol to define the conditions for digital money usage.
- A Name Service to bridge the gap between intricate wallet addresses and alternative name identifiers for comprehensible verification.
Part of MAS’ initiatives includes the expansion of digital money trials under Project Orchid. This expansion will involve industry players conducting trials on tokenised bank liabilities, wallet interoperability, supplier financing, and institutional payment controls.
UOB, among the industry players involved, expressed enthusiasm about collaborating 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,” stated Leong Yung Chee, head of Blockchain and Digital Assets at UOB.
To complement these digital money trials, MAS is set to initiate the development of central bank digital currency (CBDC) for wholesale interbank settlement by 2024.
This marks a significant step forward as MAS will pilot the “live” issuance of wholesale CBDCs for settling retail payments between commercial banks, potentially expanding to include cross-border securities trade in future pilots.
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