Digital Currency Trials Commenced by MAS for Singapore Dollar
In a significant step towards digital currency adoption, the Monetary Authority of Singapore (MAS) has announced the successful completion of Phase 1 of Project Orchid. This project, which explores the concept of purpose-bound digital Singapore Dollars (SGD), or Purpose-Bound Money (PBM), has seen collaboration with various government agencies and industry players.
The report published by MAS details potential uses of a purpose-bound digital SGD and the supporting infrastructure required. One such use is in enhancing the current SkillsFuture Singapore (SSG) Credit disbursement process. United Overseas Bank (UOB) is among the entities using PBM to enable SkillsFuture grants to automatically be released to participating training providers when eligibility conditions are met.
Sopnendu Mohanty, Chief Fintech Officer at MAS, stated that through practical experimentation with the industry, understanding of the potential uses of a digital Singapore dollar and the infrastructure required to support it has been sharpened.
The trials of PBM are not limited to the financial sector. The first trial involves DBS and GovTech's Open Government Products Division (OGP) using PBM for disbursements to selected individuals. The second trial, in conjunction with the Singapore Fintech Festival (SFF) 2022, involves Temasek, FAZZ, and Grab testing the issuance of PBM as commercial digital vouchers.
Temasek is also conducting a PBM trial at a Temasek leadership conference, in collaboration with FAZZ Financial and FOMO Pay. The third trial for PBM involves OCBC and the Central Provident Fund Board (CPFB) for funds disbursement from government agencies, without the need for recipients to have a bank account.
While the case for a retail Central Bank Digital Currency (CBDC) in Singapore is not compelling for now, MAS continues to actively explore good use cases for digital currencies. The project, now known as Project Guardian, sees MAS experimenting with programmable digital Singapore dollars and the necessary supporting system.
PBM offers a unique feature that enables senders to specify conditions, such as validity period and types of shops, when making transfers in digital SGD. This could potentially revolutionise the way funds are disbursed, making transactions more secure and efficient.
A digital SGD could come in various forms, such as a retail CBDC - the digital equivalent of fiat money, or in the form of privately issued money such as tokenised bank deposits or securely backed stablecoins. As the trials progress, we can expect to see more developments in the realm of digital currencies in Singapore.
This article was edited based on a photo by Dan Nelson via Unsplash.
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