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With MAS hoping to build an innovative and responsible digital asset ecosystem, it continues to explore the retail CBDC, despite finding it currently unnecessary.
The Monetary Authority of Singapore (MAS) has completed the first phase of its CBDC project, Project Orchid. MAS launched Project Orchid in November 2021 as a multi-year and multi-phase project to examine the potential design and technical requirements of a retail CBDC system in Singapore.
The first phase investigated the potential use cases for a programmable digital Singapore dollar and the necessary infrastructure to integrate it with existing payment systems. Specifically, the concept of purpose-bound money (PBM).
By definition, PBM is a protocol that sets out the exact conditions under which a currency may be used. PBM allows senders to state how and where the money will be used. At the end of the phase, MAS found out the county has no current need for a retail CBDC. However, MAS wants to be prepared should the need arises in the future.
Project Orchid is Just One of Many
MAS is not the only financial institution working on a CBDC project. According to a BIS survey in May, over 70 countries already had their central banks working on a CBDC.
Just today, the Reserve Bank of India (RBI) launched a digital rupee pilot test for the wholesale sector. RBI plans to launch a pilot for the retail segment in a month. China is further along, having launched pilot tests for the retail market in multiple cities. The United States, the United Kingdom, and the E.U also continue to research the potential of a retail CBDC project.
With MAS hoping to build an innovative and responsible digital asset ecosystem, it continues to explore the retail CBDC, despite finding it currently unnecessary. Also, it will trial its CBDC in public and private settings in 2022 and 2023.
MAS hopes to build a system that is interoperable with the current financial system. Consequently, the next stage of Project Orchid will be to determine the best ledger technology for the CBDC and how best to integrate it within the existing financial infrastructure.
According to Mr. Sopnendu Mohanty, Chief FinTech Officer of MAS, they “look forward to collaborating further with industry participants and policymakers in subsequent phases of Project Orchid.”