Singapore's MAS proposes digital money system; Amazon and Grab initiate pilot trials

The Monetary Authority of Singapore (MAS) released a whitepaper specifying conditions for the use of central bank digital currencies (CBDCs), tokenized bank deposits, and stablecoins on distributed ledger technology.  

The whitepaper, released Wednesday, introduces the concept of Purpose Bound Money (PBM), which allows senders of digital money to specify conditions such as validity periods and even the types of shops the money can be used in.

The study was done in collaboration with the International Monetary Fund (IMF), Banca d’Italia, Bank of Korea, and various other financial institutions and FinTech firms. It outlined business and operating models for programmable money transfers.

"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. More importantly, it has enhanced the prospects for digital money becoming a key component of the future financial and payments landscape," said Sopnendu Mohanty, Chief FinTech Officer at MAS.

The PBM system grants users access to digital money via their preferred wallet provider and it allows for multiple use cases, promoting interoperability.

Amazon and Grab get involved

Amazon, FAZZ, and Grab are collaborating on a pilot use-case involving escrow arrangements for online retail payments using the PBM protocol.

In the case of online retail payments, the PBM protocol is designed to give greater assurance to both buyers and sellers by ensuring payment is released to the merchant only when the customer receives the items purchased.

DBS, Grab, FAZZ, NETS, and UOB will also be testing PBM-based cashback and other incentives to improve consumer experiences while reducing merchant friction.

Building on MAS's Project Orchid, the PBM whitepaper encourages greater research among central banks, financial institutions, and FinTechs, to understand the design considerations in the use of digital money. 

The PBM source codes and software prototypes were released for public access, as part of the effort to support ongoing development and learning.