The
Monetary Authority of Singapore (MAS) unveiled a pilot program for the live
issuance of a wholesale Central Bank Digital Currency (CBDC) denominated in
Singapore dollars. The announcement was made by MAS Managing Director Ravi
Menon.
Previously,
MAS had only simulated the issuance of a CBDC in controlled test environments.
The new initiative aims to explore the feasibility and efficiency of using a
CBDC for instantaneous settlements across commercial banks. Menon expressed his
satisfaction, stating, “I am pleased to announce that MAS will pilot the
‘live’ issuance of wholesale CBDCs to instantaneously settle payments across
commercial banks.”
As
part of the test program, MAS will collaborate with local banks to explore the
use of CBDC as a settlement asset for domestic payments. Menon explained that
participating banks would issue tokenized liabilities representing claims on
their balance sheets. Retail customers could then utilize these tokenized
liabilities for transactions with merchants, with settlements occurring via an
automatic transfer of wholesale CBDC.
Menon
emphasized the streamlined nature of the process, stating: “Clearing and
settlement thus occur in a single step, on the same infrastructure, unlike the
current system in which clearing and settlement take place on different
systems, and settlement occurs with a lag.”
Wholesale
CBDCs are primarily used by central and commercial banks, as well as other
major financial institutions, for settling payments. There are four contenders
for digital money,” declared Ravi Menon, identifying them as privately
issued cryptocurrencies, CBDCs, tokenized bank liabilities, and well-regulated
stablecoins.
According
to Menon, cryptocurrencies haven’t passed the test of digital money. He
expressed his viewpoint, stating: “They have performed poorly as a medium
of exchange or store of value. Their prices are subject to sharp speculative
swings, and many investors in cryptocurrencies have suffered significant
losses.
Singapore MAS Managing Director Ravi Menon said well-regulated stablecoins as a promising digital currency complementing CBDCs and tokenized bank liabilities, but cryptocurrencies have failed the test of digital money because “they have performed poorly as a medium of exchange or…
— Wu Blockchain (@WuBlockchain) November 16, 2023
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