Singapore Has Started Experimental CBDC Settlements


The Singaporean government has announced the launch of a digital currency testing program for use in interbank transactions.

A central bank digital currency (CBDC) for wholesale interbank payments will soon be trialed in Singapore, a move that shows the government is taking digital money seriously. This is a major improvement over earlier experiments that used fake CBDCs. Managing Director Ravi Menon has led the Monetary Authority of Singapore’s (MAS) exploration of the digital money ecosystem since 2016. The use of digital money issued by central banks has recently seen a major improvement with this new breakthrough.

The trial will use a true wholesale CBDC to settle payments between commercial banks, as outlined in the Orchid Blueprint. The possibility of using this technology for the settlement of foreign securities transactions was also hinted at in Thursday’s announcement. To provide the groundwork for these experiments, the Orchid Blueprint provides a detailed blueprint. It explores several aspects of digital money, such as the possibility of expanding trials to include regulated stablecoins and tokenized bank liabilities.

This ledger will include capabilities for atomic settlement of digital tokens and programmability, in addition to tracking transactions involving digital currencies. An innovative step toward making digital currency systems more user-friendly is the creation of a “Name Service” to help with things like creating pleasant wallet addresses and names.

On top of that, the Blueprint presents an innovative idea called a “programmability protocol.” This protocol establishes certain guidelines for the exchange of digital currencies by means of “purpose-bound money” (PBM). PBM automates transactions and enables predetermined settlement conditions, showcasing the sophisticated possibilities of digital currencies.

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