Singapore to Pilot Wholesale Central Bank Digital Currencies
Come 2024, Singapore will be testing the live issuance and use of wholesale central bank digital currencies, according to Ravi Menon, managing director of the Monetary Authority of Singapore. This move aims to support payments across commercial banks in real time.
Wholesale CBDCs are digital currencies issued by a central bank and used exclusively by central banks, commercial banks, or other financial institutions for large-value interbank transactions. Unlike retail CBDCs, which cater to individuals and businesses for everyday transactions.
Project Ubin and Ubin+
One pilot project is Project Ubin, which began in 2016 to explore blockchain and digital ledger technology for payments and securities clearing and settlement. In November last year, MAS announced Ubin+ to advance cross-border connectivity with wholesale CBDCs through collaborations with international partners.
The pilot will involve local banks testing the use of wholesale CBDCs for domestic payments. During this process, tokenized bank liabilities will be issued by banks and used in transactions between retail customers and merchants.
Benefits and Future Plans
With the implementation of wholesale CBDCs, clearing and settlement will occur simultaneously on the same infrastructure, unlike the current system where this process takes place on different systems with a lag in settlement. The International Monetary Fund’s managing director has urged public sectors to prepare for deploying CBDCs and related payment platforms in the future.
Hot Take: MAS Managing Director’s Retirement
Ravi Menon is set to retire from public service and step down as managing director of MAS on Dec. 31 after being appointed in 2011. He will be succeeded by Chia Der Jiun who previously spent 18 years at MAS.
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