- The Monetary Authority of Singapore (MAS) is focusing on developing a wholesale Central Bank Digital Currency (CBDC) and tokenized bank liabilities, with live pilots planned for 2024.
- The initial use case for the wholesale CBDC includes interbank settlements for tokenized deposits and cross-border securities settlements.
Singapore’s Digital Money Vision
The Monetary Authority of Singapore (MAS) has recently unveiled its comprehensive vision for digital money, which prominently features the development of a wholesale Central Bank Digital Currency (CBDC). This ambitious initiative places Singapore at the forefront of the global transition towards digital currencies, with significant implications for the future of finance.
Wholesale CBDC: Spearheading Interbank Settlements
A key aspect of Singapore’s wholesale CBDC is its application in enabling interbank settlements for tokenized deposits. This use case is set to be tested by local banks OCBC and UOB, who will conduct retail payments using each other’s tokens. This was recently demonstrated at the Singapore Fintech Festival, showcasing the practical application of CBDCs in facilitating more efficient financial transactions.
Focus on Cross-Border Securities Settlement
In addition to interbank payments, MAS is planning to utilize the wholesale CBDC for cross-border securities settlements. This move highlights the potential of CBDCs in streamlining and securing international financial transactions, a critical aspect of the globalized economy.
Ravi Menon on the Significance of Wholesale CBDC
Mr. Ravi Menon, the Managing Director of MAS, emphasized the importance of this development, stating,
“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.”
His statement underlines the pivotal role of central bank money in ensuring safe and efficient payment systems.
Singapore’s Global Stance in Digital Currency
Singapore’s announcement of the wholesale CBDC development and the scheduled live pilots in 2024 aligns with global trends in digital currency. It follows closely on the heels of India’s plans to launch its wholesale CBDC in early 2024. Moreover, the head of the Bank for International Settlements recently expressed expectations that most countries will soon have wholesale CBDCs available.
The Monetary Authority of Singapore’s initiative to develop a wholesale CBDC marks a significant step in the evolution of digital currencies. With its focus on interbank settlements and cross-border securities settlements, Singapore is poised to play a leading role in shaping the future of digital finance. The successful implementation of these live pilots in 2024 could pave the way for a more interconnected and efficient global financial system.