SNEAK PEEK
- MAS introduces Purpose Bound Money, a unified digital money protocol.
- Collaboration with global partners underpins MAS’s digital currency advances.
- Pilot programs test PBM’s real-world applications and benefits.
In a ground-breaking move, the Monetary Authority of Singapore (MAS) has publicized a whitepaper delineating a unified protocol for applying for digital money. This pivotal plan introduces standards for using central bank digital currencies (CBDCs), tokenized bank deposits, and stablecoins on distributed ledgers.
Significantly, this pioneering venture was crafted in alliance with the International Monetary Fund, the Bank of Korea, Banca d’Italia, financial institutions, and FinTech firms.
According to the MAS press release, the revolutionary concept of Purpose Bound Money (PBM) lies at the heart of the whitepaper. It equips digital money transferors with the ability to define conditions such as valid usage periods and types of stores.
Hence, the whitepaper provides a complete PBM life cycle, from issuance to redemption. Moreover, it outlines how money transfers can be programmed to occur only when service obligations are fulfilled.
Notably, the PBM protocol boasts a design that cooperates with varied ledger technologies and forms of money. It further allows users to utilize the digital wallet provider of their choice. Consequently, the same infrastructure can serve many uses, and different wallet users can swap digital assets without customization.
Additionally, several financial institutions and FinTech companies are gearing up to test the PBM in varying contexts. Among them, Amazon, FAZZ, and Grab are exploring an escrow arrangement for online retail payments in a pilot study. Besides, a consortium including DBS, Grab, FAZZ, NETS, and UOB is piloting a PBM-based cashback system and other incentives to smooth the consumer experience.
On the same accord, building on MAS’ Project Orchid, the PBM whitepaper fosters greater research on digital money design among central banks, financial institutions, and FinTechs. Open-source codes and software prototypes were released to support ongoing development and facilitate experiments and research.
To sum up, the Chief FinTech Officer at MAS, Mr. Sopnendu Mohanty, underlined the value of collaboration in driving digital money’s future. He stated that advancements in settlement efficiency, merchant acquisition, and user experience are already evident. More importantly, he emphasized how digital money quickly becomes integral to our financial and payment landscapes.