The Monetary Authority of Singapore (MAS) has completed the first phase of its central bank digital currency (CBDC) project, according to a report on Monday.
This stage of Project Orchid explored the potential use cases for a digital Singapore dollar as well as the infrastructure required to implement one. It looked at the concept of purpose-bound digital Singapore dollars, which allows senders to specify how and where the money will be used. They found there is currently no urgent need for a retail CBDC but said they want to be prepared in case that changes.
“MAS’ vision is to build an innovative and responsible digital asset ecosystem in Singapore,” the report said. The country has been collaborating with the crypto industry and issuing licenses to big players such as Coinbase and Blockchain.com, and has continued to explore a retail CBDC despite feeling like there is no need for one. Project Orchid was announced in November last year and even then-Managing Director Ravi Menon said that the benefits of a retail CBDC were “not compelling.”
Countries around the world have been looking into retail CBDC’s. A BIS survey in May revealed that 90% of the 81 responding central banks have started work on a CBDC. The U.S., U.K. and European Union are reviewing whether or not they should issue a CBDC while China is further along than most countries in its CBDC trials.
“Although MAS does not see an urgent case for retail CBDC, it is envisioned that the study of potential use cases for a programmable digital SGD (Singapore dollar) and the infrastructure required, would enable MAS and the financial services ecosystem in Singapore to develop capabilities to support a retail CBDC should the need arise,” the report said.
MAS believes that a CBDC would be a small part of the money supply in the same way that physical cash is. Banknotes and coins issued by MAS only account for around 8% of the entire money supply, while privately issued money makes up 92%, the report said.