Singapore's central bank, MAS, today announces the launch of a live pilot program for a Singapore dollar-based central bank digital currency (CBDC).

This wholesale CBDC aims to streamline settlements among local banks.

In a speech on day two of the Singapore Fintech Festival (SFF) on Nov. 16, MAS Managing Director Ravi Menon stated:

"I am pleased to announce that MAS will pilot the 'live' issuance of wholesale CBDCs to instantaneously settle payments across commercial banks."

This marks a departure from MAS's previous simulations of CBDC issuance in test environments.

Menon disclosed plans for the central bank to collaborate with local banks, testing the practical use of CBDCs as settlement assets for domestic payments.

MAS New Initiatives

This move towards wholesale CBDCs follows is one part of three new initiatives by the MAS, also announced during SFF.

These three initiatives are namely: a blueprint delineating the requisite infrastructure for a digital Singapore dollar, an expansion of digital money trials, and a strategy to issue a "live" central bank digital currency (CBDC) for wholesale settlements.

More specifically, the MAS will endorse three types of digital money: wholesale CBDCs, tokenised bank liabilities, and regulated stablecoins.

Orchid Blueprint

The MAS previously introduced Project Orchid as an exploratory project examining the various design and technical aspects pertinent to a retail CBDC system for Singapore.

The regulator has launched multiple test CBDCs under this project have been launched, but has previously stated that there was no urgent need to move on to live testing.

As part of the three initiatives, the MAS introduced the Orchid Blueprint, a comprehensive guide to the technological framework essential for future digital money transactions in Singapore.

The blueprint, evolving from insights gained during the Project Orchid industry trials, details key infrastructure blocks for the prudent use of digital money in Singapore, such as an atomic settlement ledger, a tokenisation bridge, a programmability protocol, and a name service for easy identification.

Expanding Trials

With the last initiative, the MAS will extend Project Orchid's digital money trials.

Four new trials with industry players will scrutinise infrastructure components and commercial models.

They will work with OCBC and UOB to explore the feasibility of tokens from one bank being accepted for retail payments by another to test tokenised bank liabilities.

They will work with Ant International, Fazz, and Grab to test wallet interoperability - with the three companies pilot a concept utilising purpose-bound money for payments from Alipay users to GrabPay merchants, ensuring transaction security.

The MAS will work with Amazon and HSBC examine purpose-bound money use in tokenising payables from Amazon to merchants, enhancing liquidity for improved access to financing and working capital.

And finally, they will work with J.P. Morgan to explore payment controls, allowing institutional clients to transfer deposit tokens to clients outside their direct customer base.