Singapore’s central bank to trial digital currency, mulls use as stepping stone to build tech infrastructure
- Even as it readies to trial digital currency, MAS noted that the case for a retail central bank digital currency (CBDC) is ‘not compelling for now’
- Analysts point out that retail CBDCs may not be of interest to many Singaporean investors, who may prefer to purchase cryptocurrencies
Singapore’s central bank on Monday announced that it was exploring the concept of a purpose-bound digital currency, which can be used to issue government vouchers and payouts among others, though it noted that the case for a retail central bank digital currency (CBDC) is “not compelling for now”.
The purpose-bound digital currency is just the first phase of a larger project in partnership with private firms and a move towards establishing the technical infrastructure and competencies needed for a retail CBDC in the future.
The Monetary Authority of Singapore (MAS) said in a press release that purpose-bound digital currency would allow senders to specify conditions, such as an expiration date of the voucher and types of shops, when making transfers with its digital currency.
In its 55-page report, the MAS defined purpose-bound digital currency as “a protocol that specifies the conditions upon which an underlying digital currency can be used” and that purpose-bound digital currency can be used across different platforms and systems.
This means that use of purpose-bound digital currency could remove the need for voucher users to have a bank account, reduce any misuse of vouchers and speed up payment processes.
Partnering both government and private institutes on trials to test this concept, purpose-based digital currency could be used to digitalise vouchers and support government disbursement programmes, the MAS report stated.
Other organisations that have partnered MAS include DBS, Grab Holdings, Fazz Financial Group and Singapore electronic payments provider Nets.