Singapore expands e-money trials to pave way for digital Singdollar

The Monetary Authority of Singapore (MAS) is pushing ahead with plans to explore the potential of issuing and using digital money here.

The central bank on Thursday (Nov 16) published a blueprint outlining the infrastructure required for a digital Singapore dollar, and announced that it will be expanding trials on digital money.

MAS will also issue a “live” central bank digital currency (CBDC) for wholesale settlement, with plans to start developing CBDCs for wholesale interbank settlement next year.

The expanded digital money trials will cover four areas: tokenised bank liabilities, wallet interoperability, supplier financing, and institutional payment controls. These will be undertaken with industry players, including various merchants and financial institutions, to examine relevant infrastructure components and commercial models.

OCBC and UOB, for example, are involved in the trial to explore the feasibility of enabling tokens issued by one bank to be accepted for retail payments by another.

Meanwhile, Ant International, Fazz and Grab will launch a pilot around the purpose-bound money concept to facilitate payments by Alipay users to GrabPay merchants. This ensures that only verified Alipay wallet users can pay to eligible GrabPay merchants, with transaction limits to deter fraudulent activity, said MAS.

The regulator also plans to start the development of CBDC for wholesale interbank settlement next year, in a move that brings it closer to joining the over 10 countries which have already launched a CBDC. These countries include China, India, Nigeria and the Bahamas.

MAS said that it will pilot the “live” issuance of wholesale CBDCs, after previously simulating issuance within test environments, using it 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, it added.

MAS managing director Ravi Menon described the “live” issuance of central bank digital money for use as a common settlement asset in payments as a “significant milestone”. He added: “The issuance of wholesale CBDC reinforces the role that central bank money plays in facilitating safe and efficient payments.” The central bank’s digital money journey began in 2016, he noted.

Partners involved in the trials said that they were excited to be working with regulators on the project. UOB’s head of blockchain and digital assets Leong Yung Chee said: “When we have a fungible, secure and convenient Digital Singapore Dollar, ultimately consumers will be the biggest beneficiaries as they will enjoy more options when it comes to digital and cashless payment.”

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