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Singapore proposes a common standard to specify conditions for the use of digital currencies such as stablecoins, tokenized bank deposits, and central bank digital currencies. The contributors to the Monetary Authority of Singapore’s (MAS) whitepaper on digital money protocol include the International Monetary Fund (IMF), central banks of South Korea and Italy, as well as global leaders such as JPMorgan, Amazon, DBS Bank, and others.
MAS Proposes Common Standard For Digital Currency
The Monetary Authority of Singapore on June 21 published a whitepaper on Purpose Bound Money (PBM), proposing a common standard for the use of digital money as big banks and investors continue to bet on digital asset transfers and trading despite intense scrutiny from regulators.
The whitepaper proposes a common protocol to specify conditions for the use of digital money such as central bank digital currencies (CBDCs), tokenised bank deposits, and stablecoins on a distributed ledger. It details the concept of Purpose Bound Money (PBM), enabling senders to specify conditions from validity period to shops when making digital money transactions.
The paper is part of Project Orchid, a collaboration between the MAS and industry partners to build the foundational digital infrastructure and platforms for digital currency use cases. It outlines PBM lifecycle from issuance to redemption, as well as the protocol to interface with digital currencies supporting it.
The PBM protocol can work with multiple ledger technologies and forms of money, enabling users to access digital money using their preferred digital wallets and transfer digital assets.
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Collaboration With Industry Partners
Top companies and financial giants are launching trials to test Purpose Bound Money, making sending money and trading digital assets more efficient.
Sopnendu Mohanty, Chief FinTech Officer, 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.”
Companies such as Amazon, FAZZ, and Grab are collaborating on a pilot use case for online retail payments. Escrow arrangements are designed to allow payment to be released only when the customer receives the purchased items. Moreover, the use of PBM for cashback and other incentives to improve consumer experiences is also planned.
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