The Monetary Authority of Singapore (MAS) has stepped up its efforts to research and develop a central bank digital currency (CBDC) for retail use under the Project Orchid initiative.
According to MAS Managing Director Ravi Menon, Singapore's retail CBDC will be developed in partnership with private entities, which "would be the digital equivalent of today's banknotes and coins."
Speech At the Singapore FinTech Festival, Menon highlighted the benefits of retail CBDCs to help make transactions faster and more secure online and build an inclusive payment ecosystem.
He also believes that creating an in-house retail CBDC can reduce the investment risks inherent in dealing with privately issued stablecoins or foreign CBDCs within the Singapore payments landscape:
โA digital Singapore dollar issued by MAS that is consistent with the needs of a digitized economy could go some way to mitigating this risk. But issuing a retail CBDC is not an easy decision. "
Menon cautioned that if people had the majority of their assets in the form of digital Singapore dollars, central banks would not be in a position to make sufficient loans, citing no urgency to the need for a retail CBDC:
"But it is likely that we can manage these risks by designing the retail CBDC with sensible safeguards, such as stock and flow limits on the amount of digital Singapore dollars that anyone can place with MAS."
MAS previously experimented with wholesale CBDC under the name Project Ubin, which aimed to identify various use cases in cross-border payments. The initiative saw the launch of Partior, a blockchain-based interbank clearing and settlement network established jointly by DBS Bank, JP Morgan, and Temasek.
According to Menon, Singapore will facilitate regulatory sandboxes based on existing frameworks for market testing of low-risk activities in a pre-defined environment.
"With crypto-based activities, it's basically an investment in a forward-looking future, the shape of which is unclear at this time."
Related: Singapore to position itself as global crypto hub, says regulator
Last week, on November 2, Menon highlighted MAS's proactive efforts to implement "very strong regulation" to reduce foreseeable threats accompanied by crypto adoption:
In August, Singapore-based DBS Bank received regulatory approval to launch a crypto exchange, DBS Digital Exchange. As Cointelegraph reported, the new license guarantees the institutional trade of the main cryptocurrencies, including Bitcoin (BTC), Ether (ETH), XRP and Bitcoin Cash (BCH).
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