Yesterday the Monetary Authority of Singapore (MAS) unveiled Project Ubin+, a central bank digital currency (CBDC) that will follow three tracks to explore the use of wholesale CBDC for cross border payments.
Project Mariana, which was unveiled earlier this week by the BIS Innovation Hub, is one of the Ubin+ tracks. The BIS, together with the central banks of Singapore, France and Switzerland, will explore how to use automated market makers (AMM), a DeFi tool, for foreign exchange in cross border payments.
A second project involves interoperability between DLT and non-DLT payment systems. To further this research, MAS is participating in the SWIFT CBDC Sandbox, which involves 17 central banks s well as commercial banks.
Thirdly, CBDCs are likely to coexist with other wholesale digital currency networks. It didn’t mention names, but examples include Partior and Fnality. MAS wants to explore connectivity between CBDC and these digital currency networks as well as the role of smart contracts in addressing counterparty risks for international payments.
“Interoperable wholesale digital currencies offer efficiency gains through a growing range of cross-border use cases,” said Sopnendu Mohanty, MAS Chief FinTech Officer. “We will evaluate these new use cases simultaneously to keep pace with technological advancements, focusing on use cases that create good value for the broadest range of stakeholders.”
MAS has already contributed extensively to CBDC research in its five-phase Project Ubin. More recently, it was involved in multi-CBDC experiments for cross border payments with Project Dunbar, including the central banks of Malaysia, Australia and South Africa, led by the BIS Innovation Hub.
The central bank sees a greater need for wholesale CBDC than retail CBDC at present but is nonetheless conducting retail CBDC trials under Project Orchid. The most recent initiative is for programmable money, or what it terms purpose-bound money.