Singapore's central bank unveiled a pilot program for a Singapore dollar-based central bank digital currency (CBDC) with a wholesale CBDC to be used by local banks for settlements.
"I am pleased to announce that MAS will pilot 'live' issuance of wholesale CBDCs to instantly settle payments between commercial banks," said MAS CEO Ravi Menon on Nov 16 at the Singapore Fintech Festival.
The MAS had previously it only simulated the issuance of a CBDC In testing environments, Menon said the central bank would soon partner with Singapore banks to test the use of a CBDC as a settlement asset for domestic payments.
As part of the testing program, Menon explained that banks will issue tokenized liabilities that represent claims on their balance sheets. Retail clients could use those tokenized liabilities to transact with merchants, which would be settled through an automatic transfer of a wholesale CBDC.
The MAS had previously it only simulated the issuance of a CBDC In testing environments, Menon said the central bank would soon partner with Singapore banks to test the use of a CBDC as a settlement asset for domestic payments.
"Clearing and settlement thus occur in a single step, on the same infrastructure, unlike the current system where clearing and settlement occur in different systems and settlement occurs with a delay," he said.
A wholesale CBDC is primarily used by central and commercial banks and other large financial institutions to settle payments.
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On November 15, the MAS introduced five additional industrial pilots to its financial infrastructure testing program, called Project Guardian, to evaluate various use cases around asset tokenization.
The new partnerships saw the project expand from 12 to 17 members, now including major financial institutions such as BNY Mellon, HSBC and Citi Group.
In May. 1, the MAS and the New York Federal Reserve published the results of a six-year testing program of the usefulness of a CBDC in cross-border payments, called Project Ubin. The results showed that CBDCs were potentially useful in making cross-border payments more efficient and cost-effective.
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