The Monetary Authority of Singapore (MAS) released on Wednesday a whitepaper for “purpose-bound” money, detailing a technical overview of digital currencies designed for specific purposes. The whitepaper was developed in collaboration with Banca d’Italia, Bank of Korea, International Monetary Fund, Amazon, DBS Bank, Onyx by J.P. Morgan and other industry players.
See related article: Singapore’s DBS Bank trials use of digital SingDollar with vouchers
Fast facts
- The central bank’s purpose-bound money is designed to run on a common protocol that works on blockchain and non-blockchain ledger systems, MAS said in its whitepaper. Digital monies can come in various forms, such as central bank digital currencies, tokenized bank liabilities or stablecoins.
- With a standardized format, users can access digital money through a wallet provider of their choice, MAS said. Purpose-bound money is a bearer instrument that is transferable on a peer-to-peer basis without intermediaries.
- The MAS outlined numerous applications for purpose-bound digital currencies, with a specific emphasis on their potential to safeguard both customers and vendors in online transactions.
- Currently, e-commerce often requires upfront payment, securing the interest of merchants while leaving customers vulnerable. Conversely, cash-on-delivery options prioritize customer security but leave merchants, especially those dealing with perishable goods such as food, exposed to risk. The MAS claims that its new concept of purpose-bound digital money could bridge this gap. By ensuring funds are transferred once service obligations have been fulfilled, it promises to provide an equitable solution, benefiting both consumers and merchants.
- The whitepaper builds upon the central bank’s Project Orchid — a collaborative effort between MAS and industry partners aimed at building infrastructure required for a digital money platform.
See related article: Payments platform StraitsX to show real-world stablecoin use at Singapore Fintech Festival
