Singapore Examines Potential Applications for Programmable Digital Currency

Central bank says it is testing various uses of purpose-bound digital money with industry players, including funds disbursement without requiring recipients to have a bank account.

FREMONT, CA:Singapore is evaluating potential applications for purpose-bound digital money through industry participant trials, including fund delivery, without recipients needing a bank account. However, it hasn't discovered any support for a central bank digital retail money.

The Monetary Authority of Singapore (MAS) stated that it has examined the usage of a retail central bank digital currency or a digital version of dollars and coins but had not identified any urgent need. However, it made clear that should the necessity arise, it would work to develop the technical skills and knowledge necessary to issue a retail central bank currency.

The best ledger technology to develop such a currency and its integration with the nation's current financial market infrastructure will be examined in later evaluations. Instead, there is potential for purpose-bound, or programmable, the digital money that would allow senders to specify requirements for transfers in digital SGD, such as the kinds of stores and validity period.

Digital currency would be incorporated with programming logic and be able to be exchanged between two parties without the need for middlemen, which described these programmable currencies as bearer instruments. Brands might offer incentive points and corporate coupons, while individuals may use digital currency to pay their taxes, for instance.

The regulator announced that many use cases would be examined in conjunction with federal departments and business stakeholders. One such trial was the distribution of digital government vouchers to chosen individuals, who could subsequently utilise the monies at participating food and beverage establishments. It was conducted by DBS Bank and GovTech's open government products division. These retailers would receive payment directly in digital Singapore dollars for redeemed vouchers.

OCBC Bank and Central Provident Fund Board will conduct another pilot study to examine the use of funds distributed by government organisations without requiring users to have a bank account. The programme would be evaluated with chosen volunteers and in a controlled setting.

The digital currency will be issued in the form of commercial vouchers. The event's approximately 5,000 participants will be able to utilise the digital vouchers to purchase at participating merchants using their favourite e-wallet software. Additionally, users can utilise the certificates at participating Grab partner merchants.

The application of purpose-bound money for wider distribution of money for commercial purposes and its interoperability with e-wallets, payment systems, and blockchains will be explored during the trials. With the help of these use cases, customers will be able to use their preferred platform and purpose-bound money tokens to make purchases.

The ability to integrate logic-based requirements in the form of smart contracts that are automatically checked when filed for transfers is provided by purpose-bound money. The token will unwrap and release the underlying digital currency, delivering it to a merchant's digital wallet in real-time, making payments more efficient. The recipient can then utilise the digital currency right away for additional payouts.