Singapore is taking initiative to establish a common standard for the use of digital currencies, including stablecoins, tokenized bank deposits, and central bank digital currencies (CBDCs). The technical paper, published by Singapore Monetary Authority (MAS), saw contributions from the International Monetary Fund (IMF), central banks of South Korea and Italy, and global giants such as JPMorgan, Amazon, and DBS Bank.
MAS Working on Creating a Common Standard for Digital Coins
On June 21, MAS proposed the establishment of a common standard for the use of digital currencies by large banks and investors with the publication of a technical document on Purpose-Based Money (PBM), during a time when regulators continue to focus intensively on digital asset transfer and trade.
The technical document suggests a common protocol for determining the terms of use of digital currencies on a distributed ledger, including CBDCs, tokenized bank deposits, and stablecoins. It provides a detailed explanation of the PBM concept, which allows issuers to set conditions for digital currency transactions, ranging from validity period to store conditions.
The work is part of Project Orchid, a collaboration between MAS and industry partners to build fundamental digital infrastructure and platforms for digital currency use-cases. The technical document outlines the PBM protocol, which interfaces with the supporting digital currencies throughout their lifecycle from issuance to redemption. It operates with multiple ledger technologies and currency formats, enabling users to access and transfer digital assets using their preferred digital wallets.
Collaboration with Giants for Tests
Major corporations and financial giants are lining up to test the PBM, which makes money transfer and digital asset trade more efficient. Regarding the collaborations, Sopnendu Mohanty, Chief Officer of MAS’s FinTech unit, said, “This collaboration between industry players and policy makers has helped to make significant progress in payment efficiency, investor acquisition, and user experience with the use of digital currency. More importantly, it increased the possibility of digital currency becoming a fundamental component of the future financial and payment environment.”
Companies like Amazon, FAZZ, and Grab collaborated on a pilot use case for online retail payments. In this example, escrow arrangement was made to allow payment to be released only when the customer received the purchased products. Also, plans are underway to use PBM for cashback and other incentives to improve consumer experiences.
