The Monetary Authority of Singapore (MAS) has published a report detailing potential uses of a purpose-bound digital Singapore dollar (SGD) and the supporting infrastructure required.
The report also marked the successful completion of Phase 1 of Project Orchid which explored the concept of purpose-bound digital SGD, which the MAS refers to as purpose-bound money or PBM.
PBM enables senders to specify conditions, such as validity period and types of shops, when making transfers in digital SGD.
MAS says that a digital SGD could come in the form of a retail central bank digital currency (CBDC) — the digital equivalent of fiat money, or in the form of privately issued money such as tokenised bank deposits or securely backed stablecoins.
While Project Orchid found that the case for a retail CBDC in Singapore is not compelling for now, it continues to actively explore good use cases for digital currencies.
MAS, together with government agencies and industry players, have initiated a few trials to test the concept of PBMs in conjunction with the Singapore Fintech Festival (SFF) 2022.
The first trial involves DBS and GovTech’s Open Government Products Division (OGP) using PBM for disbursements to selected individuals. Trial participants can use RedeemSG vouchers at participating food and beverage outlets, and merchants will directly receive the underlying digital SGD for the vouchers redeemed.
The second trial involves Temasek, FAZZ and Grab testing the issuance of PBM as commercial digital vouchers at SFF 2022. Trial participants can utilise these vouchers through their preferred wallet applications to make purchases at participating merchants at the festival.
Temasek will also be conducting a PBM trial at a Temasek leadership conference at the same time working with FAZZ Financial and FOMO Pay.
The third trial involves OCBC and the Central Provident Fund Board (CPFB) using PBM for funds disbursement from government agencies, without requiring recipients to have a bank account.
The fourth trial involves UOB and SkillsFuture Singapore using PBM to enhance the current SSG Credit disbursement process, enabling SkillsFuture grants to automatically be released to participating training providers when eligibility conditions are met.
Sopnendu Mohanty
“The introduction of e-money provided the ability to store value electronically and carry it with us. Digital currencies go beyond that, allowing money to be programmed and used for specific purposes only.
Through practical experimentation with the industry, we sharpened our understanding of the potential uses of a digital Singapore dollar and the infrastructure required to support it.
We look forward to collaborating further with industry participants and policymakers in subsequent phases of Project Orchid,”
said Sopnendu Mohanty, Chief Fintech Officer, MAS.
