MAS lays the foundation for Singapore’s future use of digital money

SINGAPORE: The Monetary Authority of Singapore (MAS) has set on Thursday (Nov 16) the settlement ledger, tokenisation bridge, programmability protocol and name service as the four key building blocks to the use of digital currencies as it moves to shape the financial ecosystem of the future.

These building blocks make up the blueprint for Project Orchid, launched by the authority in 2021 to look at the infrastructure needed to create, for instance, a digital Singapore dollar. At the Singapore Fintech Festival on Thursday, outgoing MAS chief Ravi Menon said MAS will add four more trials to Project Orchid. “There are four contenders for digital money,” naming them as privately issued cryptocurrencies, CBDCs, tokenized bank liabilities, and well-regulated stablecoins.

He added that Stablecoins and central bank digital currencies (CBDCs), not crypto, will be part of the financial ecosystem in the future. Mr Menon explained that cryptocurrencies have failed the test of digital money because “they have performed poorly as a medium of exchange or store of value, their prices are subject to sharp speculative swings, and many investors in cryptocurrencies have suffered significant losses.”

Mr Menon said the AS will pilot the “live” issuance of wholesale central bank digital currencies (CBDCs) for the first time after it simulated issuance within test environments. The first pilot will involve live wholesale CBDC to settle retail payments between commercial banks. Future pilots could include the use of live wholesale CBDC for the settlement of cross-border securities trade.

In his speech, Mr Menon said Singapore should work towards a network of interoperable systems that allows payment, clearing and settlement to take place instantaneously and seamlessly. He added that digital assets, digital money and digital infrastructure are needed to get there. This is where Project Orchid comes in and why MAS promotes wholesale CBDCs, tokenised bank liabilities and regulated stablecoins.

“Together, digital assets, digital money, and a foundational digital infrastructure can help realize the vision of seamless financial transactions across the world,” he said. /TISG