The Monetary Authority of Singapore (MAS) unveiled a pilot program for the live issuance of a wholesale Central Bank Digital Currency (CBDC) denominated in Singapore dollars. The announcement was made by the Managing Director of MAS, Ravi Menon.

MAS Takes CBDC from Simulation to Live Issuance

Previously, MAS had only simulated the issuance of a CBDC in controlled test environments. The new initiative aims to explore the feasibility and efficiency of using a CBDC for instantaneous settlements across commercial banks.

Menon expressed his satisfaction, saying: "I am pleased to announce that MAS will pilot the 'live' issuance of wholesale CBDCs to instantaneously settle payments across commercial banks."

As part of the test program, MAS will collaborate with local banks to explore the use of CBDC as a settlement asset for domestic payments. He explained that participating banks would issue tokenized liabilities representing claims on their balance sheets. Retail customers could then utilize these tokenized liabilities for transactions with merchants, with settlements occurring via an automatic transfer of wholesale CBDC.

Menon emphasized the streamlined nature of the process. "Clearing and settlement thus occur in a single step, on the same infrastructure, unlike the current system in which clearing and settlement take place on different systems, and settlement occurs with a lag."

"Wholesale CBDCs are primarily used by central and commercial banks, as well as other major financial institutions, for settling payments. There are four contenders for digital money," he declared, identifying them as privately issued cryptocurrencies, CBDCs, tokenized bank liabilities, and well-regulated stablecoins.

According to him, cryptocurrencies haven't passed the test of digital money. He expressed his viewpoint, saying: "They have performed poorly as a medium of exchange or store of value. Their prices are subject to sharp speculative swings, and many investors in cryptocurrencies have suffered significant losses."

Singapore MAS Managing Director Ravi Menon said well-regulated stablecoins as a promising digital currency complementing CBDCs and tokenized bank liabilities, but cryptocurrencies have failed the test of digital money because "they have performed poorly as a medium of exchange or…

— Wu Blockchain (@WuBlockchain) November 16, 2023

MAS Expands Fintech Exploration with Project Guardian Pilots

In a related development, MAS introduced five additional industry pilots under its financial infrastructure test program, known as Project Guardian, on 15 November. The project, initially comprising 12 members, has now expanded to include 17 participants, with major financial institutions such as BNY Mellon, HSBC, and Citigroup joining the initiative. These partnerships aim to assess various use cases related to asset tokenization.