Singapore exploring wholesale CBDC local exec says

Singapore, a global financial hub, is exploring the development of a wholesale central bank digital currency (CBDC). This is according to Sopnendu Mohanty, the chief fintech officer at the Monetary Authority of Singapore (MAS).

A wholesale CBDC is a digital form of a country's fiat currency that is designed for use by financial institutions. It can be used for a variety of purposes, such as settling payments, issuing securities, and providing liquidity.

Benefits of a wholesale CBDC

There are a number of potential benefits of wholesale CBDC. These include:

• Increased efficiency: A wholesale CBDC can help to improve the efficiency of the financial system by reducing the need for intermediaries and speeding up settlement times.
• Reduced costs: A wholesale CBDC can help to reduce the costs of financial transactions by eliminating the need for expensive payment rails.
• Increased innovation: A wholesale CBDC can help to promote innovation in the financial sector by providing a new platform for developing new financial products and services.

Why is Singapore exploring a wholesale CBDC?

Singapore is one of the world's leading financial centers. It has a strong track record of innovation and is supportive of new technologies. The MAS has been exploring the potential benefits of CBDCs for several years.

In 2017, the MAS launched Project Ubin, a collaborative initiative to explore the use of blockchain technology for cross-border payments. Project Ubin has successfully demonstrated the feasibility of using blockchain technology to settle payments between financial institutions.

In 2022, the MAS launched Project Dunbar, another collaborative initiative to explore the use of CBDCs for cross-border payments. Project Dunbar has demonstrated the feasibility of using CBDCs to settle payments between central banks.

The MAS is now exploring the development of a wholesale CBDC to build on the success of Project Ubin and Project Dunbar. A wholesale CBDC could help to make Singapore's financial system more efficient, cost-effective, and innovative.

Challenges

There are a number of challenges that need to be addressed before a wholesale CBDC can be launched. These include:

• Technology: The technology for wholesale CBDCs is still under development. It is important to ensure that the technology is robust and secure before launching a wholesale CBDC.
• Regulation: The regulatory landscape for CBDCs is still unclear. It is important to develop clear and supportive regulations for CBDCs before launching a wholesale CBDC.
• Adoption: It is important to ensure that financial institutions are willing to adopt a wholesale CBDC. This can be done by working with financial institutions and developing use cases that meet their needs.

Singapore is one of the leading countries in the world exploring the development of a wholesale CBDC. A wholesale CBDC has the potential to make Singapore's financial system more efficient, cost-effective, and innovative. However, there are a number of challenges that need to be addressed before a wholesale CBDC can be launched.

Additional information

Here is some additional information about Singapore's exploration of a wholesale CBDC:

• In 2022, the MAS launched Project Ubin+, a new initiative to explore the use of CBDCs for cross-border payments. Project Ubin+ is building on the success of Project Ubin and Project Dunbar.
• The MAS is working with a number of financial institutions to develop use cases for a wholesale CBDC. Some of the use cases that are being explored include:
  • Cross-border payments
  • Securities issuance
  • Liquidity management
• The MAS is also working with other central banks to explore the possibility of interoperability between different CBDCs. This would make it possible to use CBDCs to settle payments across borders.

Overall, Singapore is one of the most advanced countries in the world in terms of its exploration of a wholesale CBDC. The MAS is committed to developing a wholesale CBDC that is robust, secure, and meets the needs of financial institutions.