Today the Monetary Authority of Singapore (MAS) outlined its digital money vision. It includes wholesale central bank digital currency (wholesale CBDC), tokenized bank liabilities, and regulated stablecoins. The notable absence is a retail CBDC. MAS published a paper on its retail CBDC trials, Project Orchid. However, the focus is more on the other two forms of digital money. We cover that in a separate article.
Regarding the wholesale CBDC, the first use case is to enable interbank settlement for tokenized deposits. Local banks OCBC and UOB will be the first to test retail payments using each other’s tokens and demonstrated this at the Singapore Fintech Festival. It appears Singapore will allow banks to rely on each other’s KYC processes.
Apart from interbank payments, MAS also plans to trial wholesale CBDC for cross border securities settlement.
“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,” said Mr Ravi Menon, Managing Director of MAS. “The issuance of wholesale CBDC reinforces the role that central bank money plays in facilitating safe and efficient payments.”
Singapore’s announcement follows a report that India plans to go live with its wholesale CBDC in early 2024. Last week the head of the Bank for International Settlements said he expects wholesale CBDC to be available soon in most countries.