The Monetary Authority of Singapore (MAS) has issued a report that details the potential uses of a purpose-bound digital Singapore dollar (SGD). The report includes the design considerations for implementing a programmable digital SGD for potential use cases. Future research areas will focus on improving the user experience, strengthening security and privacy capabilities, and increasing accessibility to the broad population.
The report comes after the completion of Phase 1 of Project Orchid. The MAS had announced the launch of Project Orchid in November 2021. The first phase of the project explored the concept of purpose-bound SGD, which enables senders to specify conditions such as the validity period and types of shops when making transfers.
According to the MAS, a digital SGD can appear in the form of a retail Central Bank Digital Currency (CBDC) or privately issued money.
A CBDC is the digital equivalent of the notes and coins issued by the MAS while privately issued money refers to tokenised bank deposits or securely backed stablecoins.
Further to its statement, MAS says it has initiated a few trials to test the concept of purpose-bound digital SGD. These trials will be tested in the form of government vouchers, commercial vouchers, government payouts and managing learning accounts. They will be tested at the 2022 Singapore FinTech Festival (SFF 2022) as well as through other means.
Financial institutions participating in Project Orchid include DBS, Fazz Financial Group, Grab, Network for Electronic Transfers (Singapore) or NETS, Oversea-Chinese Banking Corporation (OCBC) and UOB. The government and commercial use cases for the project were supported by GovTech’s Open Government Products Division (OGP) and Temasek respectively.
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“The introduction of e-money provided the ability to store value electronically and carry it with us. Digital currencies, go beyond that, allowing money to be programmed and used for specific purposes only. Through practical experimentation with the industry, we sharpened our understanding of the potential uses of a digital Singapore dollar and the infrastructure required to support it. We look forward to collaborating further with industry participants and policymakers in subsequent phases of Project Orchid,” says Sopnendu Mohanty, chief fintech officer (CTO) at MAS.
