MAS Outlines Standards for Digital Money in Latest Whitepaper

MAS Outlines Standards for Digital Money in Latest Whitepaper

by June 21, 2023

The Monetary Authority of Singapore (MAS) has proposed a common protocol for digital money as financial institutions and fintech firms are launching trials for purpose bound money (PBM)under different scenarios.

In its latest whitepaper, MAS details technical specifications that outline the PBM lifecycle from issuance to redemption and the protocol to interface with digital currencies backing it.

It also looks into the business and operating models for how arrangements could be programmed such that money is transferred only upon fulfilment of service obligations or terms of use.

The whitepaper was developed in collaboration with the International Monetary Fund, Banca d’Italia, Bank of Korea as well as industry partners such as Amazon, DBS Bank, Southeast Asian fintech Fazz Financial Group, Singapore’s tech giant Grab, Onyx by J.P. Morgan, Network for Electronic Transfers (NETS), OCBC Bank, GovTech Singapore’s division Open Government Products, and UOB.

Some of the trials that these financial institutions and fintech firms are launching include online commerce where Amazon, FAZZ and Grab are collaborating on a pilot use case involving escrow arrangements for online retail payments.

This allows payment to be released to the merchant only when the customer receives the items purchased, thus providing greater assurance to both parties.

Meanwhile, DBS, Grab, FAZZ, NETS and UOB, will trial the use of PBM based cashback and other incentives for programmable rewards.

This aims to improve consumer experiences while reducing frictions faced by merchants, such as manual reconciliation of sales proceeds and time needed to onboard new sales campaigns.

Sopnendu Mohanty

Sopnendu Mohanty

Sopnendu Mohanty, Chief Fintech Officer, MAS, said,

“This collaboration among industry players and policymakers has helped achieve important advances in settlement efficiency, merchant acquisition, and user experience with the use of digital money.


More importantly, it has enhanced the prospects for digital money becoming a key component of the future financial and payments landscape.”

The PBM whitepaper builds on MAS’ Project Orchid, and aims to encourage greater research among central banks, FIs, and fintechs, to understand the design considerations in the use of digital money.

To support ongoing development and learning, PBM source codes and software prototypes developed under Project Orchid were released today for public access.

The open source codes and prototypes demonstrate how PBM can be used to embed digital money in escrow arrangements.

This serves as a reference model to foster interoperability across different platforms. Policymakers, businesses and FIs can tap on the open source-codes and prototypes to facilitate their experiments and research.