Monetary Authority of Singapore Outlines Common Protocol For Digital Money

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June 21, 2023 by Lipika Deka

Singapore’s de facto central bank- The Monetary Authority of Singapore [MAS] today released a whitepaper that suggests a standard protocol to lay out the requirements for the use of digital currency like CBDCs, tokenized bank deposits, and stablecoins on a distributed ledger.

It allows senders to establish restrictions like the duration of the validity period and the kinds of stores when sending digital currency between various systems,

Developed in collaboration with the International Monetary Fund, Bank of Korea, financial institutions like JP Morgan, and e-commerce firms like Amazon, the whitepaper introduced the concept of Purpose Bound Money [PBM].

PBM is part of MAS’ Project Orchid which enables senders to specify conditions, such as validity period and types of shops, when making transfers in digital money across different systems. Monetary Authority of Singapore Outlines Common Protocol For Digital Money 3

According to the blog post, the PBM protocol is compatible with various ledger technologies and payment methods along with users’ preferred wallet provider.

Without the requirement for customization, stakeholders utilizing different wallet providers can transfer digital assets to one another.

Mr. Sopnendu Mohanty, The Chief FinTech Officer at MAS, said,

This collaboration among industry players and policymakers has helped achieve important advances in settlement efficiency, merchant acquisition, and user experience with the use of digital money. More importantly, it has enhanced the prospects for digital money becoming a key component of the future financial and payments landscape.

The chief financial regulator of Singapore has been experimenting with blockchain technology on a number of fronts, including JPMorgan, DBS, and Marketnode, a joint venture between Temasek and the Singapore Exchange that operates a digital markets infrastructure.

Last year, MAS launched an initiative called Project Guardian that was intended to test the feasibility of applications in asset tokenization.

Singapore Ramp Up Its Efforts

One key component of the project investigates the use of open, interoperable networks to trade digital assets across platforms and liquidity pools, including current financial infrastructure, using public blockchains.

Singapore’s efforts come amid increasing headwinds for the cryptocurrency industry especially in the US. In the middle of this crackdown, the city state’s central bank has positioned itself as an Asian regulator eager to use cutting-edge technology to strengthen its position and the nation’s financial sector.

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