MAS Proposes Standards for Digital Money

The Monetary Authority of Singapore, MAS, has published a press release to announce the publication of a whitepaper proposing „a common protocol to specify conditions for the use of digital money such as central bank digital currencies (CBDCs), tokenised bank deposits, and stablecoins on a distributed ledger“.
The whitepaper introduces the concept of Purpose Bound Money (PBM), which allows senders to specify conditions for money transfers, such as validity period of the transactions or the types of shops to whom payments may be directed. The whitepaper which was developed in collaboration with various organizations, financial institutions, and FinTech firms, covers technical specifications and business models (use cases) for the implementation of PBM. Such use cases range from the provision of trade financing, to the fulfillment of various contractual agreements prior to the initiation of a mortgage loan.
The presented PBM protocol is designed to be compatible with various ledger technologies and forms of money, providing users with flexibility in choosing their wallet providers. It allows for the same infrastructure to be used in multiple use cases without customization. Financial institutions and FinTech firms are conducting trials to test the usage of PBM in scenarios such as online commerce and programmable rewards. Concurrently released software prototypes enables such testing.
According to MAS, the whitepaper builds upon Project Orchid which explores digital infrastructure design issues for the implementation of a digital Singapore dollar. In an effort to support further development and learning, MAS has recently released the source codes and software prototypes developed under Project Orchid to the public. These resources demonstrate how PBM can be integrated into escrow arrangements and serve as a reference model to promote interoperability across platforms. Policymakers, businesses, and financial institutions can utilize the open-source codes and prototypes to conduct their own experiments and research in this field.