Monetary Authority of Singapore Initiates Project to Study Retail CBDC

The Monetary Authority of Singapore (MAS) has initiated a project to study the technical aspects of developing a retail CBDC. This was said by the regulator’s head Ravi Menon at the annual fintech conference.

According to him, MAS recognises the potential of a CBDC, but does not consider the case for its launch “convincing enough”. He noted that cash would be used for quite some time yet, and described the prospect of the domestic currency being displaced by foreign digital assets as a “distant side risk”.

Menon explained that most Singaporeans already have bank accounts, and electronic payments in the city-state have proven effective.

Nevertheless, MAS wants to be ready to issue a CBDC if such a need arises. To this end, the Authority has launched the “Project Orchid” program, which will focus on studying the technological infrastructure and technical solutions designed for issuing a national digital currency.

“The issuance of retail CBDCs is ultimately a socio-economic, not a monetary issue,” added Menon.

According to the official, a CBDC could carry “significant risks to monetary and financial stability”, especially during crises, but these risks can be managed.

Throughout 2021, MAS gave heightened attention to the national digital currency.

In June, with the participation of IMF, OECD, World Bank and Asian Development Bank, launched a competition to find solutions to 12 design challenges for retail CBDCs. In August, 15 finalists were announced.

In July, the regulator, together with the Bank of France, completed an experiment using this instrument in wholesale cross-border payments and settlements.

In September, MAS became a participant in the Bank for International Settlements’ “DANBAR” project. The latter was aimed at developing prototypes of common systems for international transfers using several CBDCs.

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