Singapore teams up with Korea, Italy and IMF on CBDC operating models

A recent white paper looks into possible business and operating models as well as outlining how purpose-bound money would work

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The Monetary Authority of Singapore is moving forward in researching digital money — including central bank digital currencies (CBDCs) — and its use cases.

MAS released the new white paper on digital money in partnership with the Bank of Italy, Bank of Korea and the International Monetary Fund

The paper outlines purpose-bound money (PBM), which means money programmed to be used for a specific purpose without programming it directly. The research seeks to ensure that ”programmability does not come at the expense of digital money’s ability to serve as a medium of exchange.”

PBMs have two core components: the wrapper and the store of value. The wrapper “implemented in the form of smart contract code, specifies the conditions upon which the underlying digital money can be used.” 

The paper states that a PBM alone is limited to “intended purposes.” However, with the wrapper, the PBM can be programmed to release and transfer the digital currency when specific conditions are fulfilled.

A PBM would also allow for privacy — a concern that many banks have echoed around CBDCs. 

“The composable nature of the PBM design means that it is possible for the PBM Wrapper smart contract to be developed by a private sector entity while using a CBDC that is issued by a central bank as the underlying digital money,” the paper says.

Purpose bound money is one of three possible ways to instill programming. There’s also programmable payment — which would set things such as recurring payments or daily spending limits — and would be implemented through an application programming interface (API).

There’s also programmable money, which includes both the necessary programming and the store of value, unlike programmable payments. 

The white paper states, “programmable money has the advantage of being self-contained and having conditional logic transferrable on a peer-to-peer basis between parties. With central banks, commercial banks and payment service providers globally exploring different CBDCs, tokenized bank liabilities and stablecoin designs.”

PBM would also allow for usage by both public and private sectors, though the paper notes that constraints should be set by policymakers on use cases as well as who can issue and distribute the digital currencies. 

Due to the amount of research going into CBDCs internationally, the banks behind the white paper believe that a “common framework” is needed to ensure interoperability on the current financial infrastructures and allow the framework to interact with different types of digital money.

“This collaboration among industry players and policymakers has helped achieve important advances in settlement efficiency, merchant acquisition, and user experience with the use of digital money,” Sopnendu Mohanty, Chief FinTech Officer at MAS, said in a statement

“More importantly, it has enhanced the prospects for digital money becoming a key component of the future financial and payments landscape.”

According to the statement released alongside the white paper, fintech firms as well as tech firms such as Amazon are testing out both PBM and online retail payments.


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