The Monetary Authority of Singapore (MAS) has suggested a standard protocol for the usage of digital currencies on a distributed ledger, such as stablecoins, tokenized bank deposits, and central bank digital currencies (CBDCs).
The specifics may be found in a whitepaper that was published on June 21, 2023. The whitepaper calls for further investigation among central banks, financial institutions, and fintech firms to comprehend the design factors involved in deploying digital money.
The whitepaper claims that while if digital currency allows for the potential of programming certain qualities into each bearer asset, and therefore determines how the digital currency is to be used, this would affect the currency’s attributes and acceptability as a means of exchange.
The whitepaper investigated several programmability models, including the programmable payments model, the programmable money model, and the purpose bound money (PBM) model, to comprehend how the fungibility of digital money may be preserved.
The benefit of programmable payments, according to the white paper, is their capacity to design a set of programming rules or conditions that may be used with a range of various payment methods. The programmable money concept offers the benefit of being independent and having conditional logic that may be shared between parties on a peer-to-peer basis.
As a result, there is an increasing need to provide a standard framework for interfacing with various digital currencies and guaranteeing compatibility with current financial infrastructure.
The PBM paradigm has the benefit of including programming logic indicating the usage of digital money as a store of values. A technical explanation of the PBM model idea is provided in the whitepaper.
According to the whitepaper, the PBM model utilizes several ledger technologies and builds on both the programmable payment and programmable money models. Without the requirement for customisation, PBM allows customers to access and transfer virtual currency using the wallet provider of their choice.
The PBM model’s possible applications are covered in more detail in the whitepaper, which was created in partnership with the International Monetary Fund, Banca d’Italia, Bank of Korea, financial institutions, and FinTech companies.
“This industry-government partnership has made significant strides in merchant acquisition, settlement efficiency, and user experience with digital money. More crucially, it has improved the chances that digital money will play a significant role in the financial and payments environment of the future, according to Mr. Sopnendu Mohanty, the Monetary Authority of Singapore’s chief fintech officer.
There is no immediate need for a retail CBDC in Singapore, according to the MAS. According to the MAS, this document is not intended to promote any particular policy goals nor to support any particular technological solution.