<p>The Monetary Authority of Singapore (MAS) has unveiled plans to initiate a live central bank digital currency (CBDC) pilot for wholesale interbank settlement in 2024.</p><h2 id="header-0">Moving beyond simulation</h2><p>This pilot will move beyond simulation, involving the actual utilization of a live wholesale CBDC for settling payments between commercial banks. Furthermore, MAS indicated that upcoming pilots may extend to leveraging wholesale CBDCs for the settlement of cross-border securities trade.</p><p>MAS Managing Director Ravi Menon expressed the significance of this move, stating:</p><p>“The ‘live’ issuance of central bank digital money for use as a common settlement asset in payments is a significant milestone in MAS’ digital money journey that began in 2016. The issuance of wholesale CBDC reinforces the role that central bank money plays in facilitating safe and efficient payments.”</p><h2 id="header-1">Orchid Blueprint</h2><p>This <a href="https://www.mas.gov.sg/news/media-releases/2023/mas-lays-foundation-for-safe-and-innovative-use-of-digital-money-in-singapore" rel="noopener noreferrer nofollow">announcement</a> is a key component of the Orchid Blueprint, a comprehensive plan detailing the infrastructure essential for facilitating the pilot and future developments. In addition to the wholesale CBDC initiative, the Orchid Blueprint outlines the expansion of trials to encompass tokenized bank liabilities and regulated stablecoins, solidifying Singapore’s commitment to fostering innovation in the digital finance space.</p><p>As part of the Orchid Blueprint, MAS is set to create a settlement ledger to record digital money transfers. This ledger will incorporate features like programmability and atomic settlement of digital tokens. To enhance user experience, a “Name Service” for customer-friendly wallet addresses and name identifiers is on the agenda. Additionally, a tokenization bridge will be developed to connect existing account-based settlement systems with ledgers compatible with tokenized forms of digital money.</p><h2 id="header-2">Purpose-bound money</h2><p>The Orchid Blueprint introduces a “programmability protocol” based on the concept of “purpose-bound money” (PBM). PBM, a concept considered by the MAS in a whitepaper that it <a href="https://medium.com/&#64;coinness.gl/singaporean-regulator-proposes-framework-for-digital-money-use-dcd81e59e6a2" rel="noopener noreferrer nofollow">published</a> earlier this year, allows for the specification of certain conditions for the use of digital money, enabling automation of transactions and predefined conditions for settlement. This innovative approach empowers centralized planners to define the conditions for usage, bringing a new level of flexibility to the digital financial landscape.</p><p>This development aligns with the broader trend of increasing institutional interest in digital currencies and blockchain technology. The move towards live CBDC pilots, tokenization and stablecoins underscores Singapore’s commitment to staying at the forefront of financial innovation. As the Orchid Blueprint unfolds, it sets the stage for a dynamic and technologically advanced financial ecosystem, reinforcing Singapore’s position as a leader in the global digital finance arena.</p><p>In a related move within the region, crypto firm Paxos recently <a href="https://medium.com/&#64;coinness.gl/paxos-gets-green-light-from-singapore-regulator-for-usd-stablecoin-216ab1cef258" rel="noopener noreferrer nofollow">announced</a> plans to launch a new USD-backed stablecoin in Singapore, receiving in-principle approval from MAS to issue the stablecoin. Meanwhile, International Monetary Fund (IMF) Managing Director Kristalina Georgieva <a href="https://www.scmp.com/week-asia/economics/article/3241675/cbdcs-can-replace-cash-improve-cross-border-payments-imf-chief-singapore-fintech-event" rel="noopener noreferrer nofollow">outlined</a> in a keynote speech at the Singapore FinTech Festival earlier this week that CBDCs not only could replace cash but also improve financial inclusion.</p><p>These concurrent developments indicate the growing convergence of traditional financial systems with the expanding digital currency landscape.</p>

Singapore’s MAS gears up for live CBDC pilot

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