Monetary Authority of Singapore to start 'live' wholesale CBDC pilot

The Monetary Authority of Singapore announced it will pilot a live central bank digital currency for wholesale interbank settlement next year.

This pilot will not be simulated, but will involve the use of a live wholesale CBDC to settle payments between commercial banks. Thursday's announcement added that future pilots could include the use of a wholesale CBDC for the settlement of cross-border securities trade.

"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. The issuance of wholesale CBDC reinforces the role that central bank money plays in facilitating safe and efficient payments," MAS Managing Director Ravi Menon said.

The Orchid Blueprint

The announcement from Singapore's central bank is part of the Orchid Blueprint, which details the infrastructure that will be developed to facilitate the pilot.

Apart from the wholesale CBDC plan, the Orchid Blueprint detailed ways to expand trials to include tokenized bank liabilities and regulated stablecoins. The Orchid Blueprint identified the specific infrastructure needed to expand the use of CBDCs, tokenization and stablecoins within Singapore.

A settlement ledger will be developed to record digital money transfers, with supporting features such as programmability and atomic settlement of digital tokens. The blueprint detailed how it would develop a "Name Service" for customer-friendly wallet addresses and name identifiers. A tokenization bridge is also planned to connect existing account-based settlement systems with ledgers compatible with tokenized forms of digital money.

The Orchid Blueprint also set out a "programmability protocol." This involves the use of "purpose-bound money," or PBM, for specifying certain conditions for the use of digital money. Digital money can be programmed, allowing for automated transactions, and predefined conditions for settlement. PBM is a concept developed by the MAS, enabling money to be directed toward specific purposes,and enabling centralized planners to define the conditions for usage.

The news comes after crypto firm Paxos announced plans to launch a new USD-backed stablecoin in Singapore. On Wednesday, Paxos Digital Singapore Pte. Ltd. received in-principle approval from the MAS to issue a USD-backed stablecoin.