There is “no pressing need” for a retail central bank digital currency (CBDC) in Singapore at this point in time, but market shifts and changing customer expectations are nevertheless forcing the central bank to prepare for a possible issuance in the future, an assessment by the Monetary Authority of Singapore (MAS) says.
The paper, titled A Retail Central Bank Digital Currency: Economic Considerations in the Singapore Context, looks at what a retail CBDC could look like in the city-state, exploring its potential implications for financial stability and monetary policy.
According to the paper, retail payments in Singapore are already competitive, efficient and cheap, and new initiatives are in the pipeline to introduce more innovation. Additionally, the soundness of the Singapore dollar and its dominance in the domestic economy make it unlikely for any foreign currency to emerge as a substitution. These are some of the reasons why Singapore is in no hurry to develop a retail CBDC, MAS says.
Nevertheless, a digital Singapore dollar could bring a number of benefits. These include enabling greater innovation in payments and payment-adjacent digital services, as well as providing a digital medium of exchange that’s safe, liquid, widely accepted and which better addresses users’ growing preference for digital channels.