The Monetary Authority of Singapore (MAS), the financial regulatory body of Singapore, has published a whitepaper outlining the common standards for the use of digital money. This crypto-friendly act is a testament to the growing adoption of digital assets in the island country of Singapore.
MAS Publishes Whitepaper Of Common Protocol For Digital Money Use
On June 21, 2023, the Monetary Authority of Singapore published a whitepaper proposing a standard protocol to specify conditions for the use of digital money. Some of the digital assets that fall under this category include central bank digital currencies (CBDCs), tokenized bank deposits, and stablecoins on a distributed ledger.
The whitepaper was released alongside software prototypes, which demonstrate the Purpose Bound Money (PBM) concept. This PBM concept allows senders to specify conditions, like validity periods and types of shops when transferring digital money across diverse systems.
According to MAS’ press release, the 25-page document was developed in collaboration with the International Monetary Fund (IMF), Banca d’Italia, Bank of Korea, and other financial companies. It covers technical details that elaborate on the PBM lifecycle and the protocol to interface with its supporting digital currencies.
Additionally, the whitepaper includes business and operating models for how arrangements could be programmed so that money is only transferred when terms of use are met.
The PBM protocol is built to operate with various ledger technologies and forms of money while allowing users to access digital money from their preferred wallet provider.
Amazon, DBS, and Others Launch Trials For PBM
According to its whitepaper, Purpose Bound Money has numerous potential uses, including pre-paid packages, online commerce, commercial lease, and so on. Various financial institutions and FinTech companies are launching pilot tests for PBM to evaluate its usability under different scenarios.
MAS’ press release revealed that Amazon, FAZZ, and Grab are working together on a pilot use case involving escrow payment agreements for online retail service. This enables payment to be released to the seller only when the buyer receives the purchased items.
Meanwhile, DBS Bank, Grab, FAZZ, NETS, and UOB will test the use of PBM-based cashback and other rewards. This aims to enhance customer experience while curtailing the problems encountered by merchants, like manual reconciliation of sales proceeds.
In the media release, Mr. Sopnendu Mohanty, Chief FinTech Officer at MAS, stressed the importance of collaboration amongst key players and policymakers in the global financial industry.
“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,” he said.
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