On Monday, October 31st, the Central Bank of Singapore (CBS) announced plans for four pilot projects, set to be conducted this year, that will test the feasibility of a digital Singapore dollar (SGD) for use in payments between individuals, businesses, and the government.
Government agencies, including the Monetary Authority of Singapore (MAS), are set to lead the programs in conjunction with the DBS, Grab, OCBC, and UOB banks, according to a statement by the city state’s central bank.
The trials are focused on testing the concept of purpose-bound money (PBM). PBM is a form of digital currency that enables issuers to set terms when making payments to individuals and entities, including the currency’s period of validity, and the types of retailers it can be used at. In this way, the use of PBMs allows issuers to automate a voucher’s delivery and redemption. DBS believes that small to medium-sized businesses (SMEs), and retail storefronts could find the program particularly useful.
DBS and the Open Government Products (OGP) division of the Government Technology Agency will set out to test a digital currency for use in redeeming government vouchers. The trial’s participants will be able to use RedeemSG, OGP’s voucher system, at participating food and beverage outlets to instantly pay merchants in digital Singapore dollars.
The pilot program is a part of a broader project called ‘Project Orchid’, which, backed by Singapore’s central bank, aims to develop a programmable digital Singapore dollar (SGD). To this end, DBS will be tasked with deploying the SGD framework, while OGP will enable and work on smart contract functionalities.
On the Flipside
- Singapore’s monetary authority argues that there is no “compelling case” for the government to issue a national digital currency, as stated by Ravi Menon, Managing Director of the Monetary Authority of Singapore.
Why You Should Care
- If succesful, the developments could serve to cut down on the lengthy processing period currently required for firms to receive money. Modern vouchers, even those in a digital format, require backend management, which ultimately hinders the procedure.
Read More About Singapore’s CBDC Efforts:
The Quest For The Singapore CBDC Winner
Learn about what CBDCs are, and how they work:
Central Bank Digital Currency (CBDC): What to Know