• The Monetary Authority of Singapore (MAS) has published a whitepaper proposing conditions for the use of central bank digital currencies (CBDCs), tokenized bank deposits and stablecoins.
• Amazon, FAZZ, Grab, and DBS are participating in a pilot program involving escrow arrangements for online retail payments.
• The whitepaper builds on MAS’ Project Orchid and suggests that the new digital asset ecosystem could be mainly comprised of CBDCs, tokenized bank liabilities and stablecoins.

Introduction

The Monetary Authority of Singapore (MAS) has published a whitepaper that proposes conditions for the use of central bank digital currencies (CBDCs), tokenized bank deposits and stablecoins. This paper is currently paired with a pilot program that Amazon and several other corporate giants are participating in.

Purpose Bound Money (PBM)

The whitepaper is supported by software prototypes that aim to demonstrate a concept called Purpose Bound Money (PBM). This allows senders to “specify conditions, such as validity period and types of shops, when making transfers in digital money across different systems”. It enables users to access digital money using the wallet provider of their choice without needing any customization between stakeholders using different providers.

Participants

Amazon, digital finance company FAZZ, food delivery and digital payments company Grab, as well as banking giant DBS are trialing PBM through various use cases involving escrow arrangements for online retail payments.

Project Orchid

The PBM whitepaper builds on MAS’ Project Orchid which was launched as a multi-year exploratory initiative to examine possible design and technical aspects of a potential CBDC system in Singapore. The researchers suggest that the new future digital asset ecosystem could be mainly comprised to CBDCs, tokenized bank liabilities and potentially well-regulated stablecoins with smart contracts used as medium exchange.

Conclusion

Initial trials demonstrate potential for this new form of digital monies but need to demonstrate their utility before being adopted more widely by society at large.

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