Singapore CBDC focused on retail to hedge privately issued stablecoins

The Central Bank of Singapore Monetary Authority of Singapore (MAS) has stepped up its efforts to research and develop the Central Bank Digital Currency (CBDC) for retail sales under the orchid project plan.

According to Ravi Menon, managing director of MA​​S, Singapore’s retail CBDC will be developed in cooperation with private entities, which “will become the digital equivalent of today’s banknotes and coins.”

Speaking At the Singapore Fintech Festival, Menon highlighted the benefits of retail CBDC in helping faster and safer online transactions and building an inclusive payment ecosystem.

He also believes that in the Singapore payment environment, when dealing with privately issued stablecoins or foreign CBDCs, establishing an internal retail CBDC can reduce the inherent investment risks:

“The digital Singapore dollar issued by MAS that meets the needs of the digital economy can mitigate this risk to a certain extent. But issuing a retail CBDC is not a simple decision.”

Menon warned that if people hold most of their assets in the form of digital Singapore dollars, on the grounds that the demand for retail CBDC is not urgent, the central bank will not be able to provide enough loans:

“But we can manage these risks by designing retail CBDCs with reasonable protective measures, such as the stock and flow caps of the digital Singapore dollars that anyone can deposit in MAS.”

MAS has previously tried wholesale CBDC under the name of Project Ubin, aiming to identify various use cases in cross-border payments. The plan launched Partior, a blockchain-based interbank clearing and settlement network jointly established by DBS Bank, JPMorgan Chase and Temasek.

According to Menon, Singapore will promote a regulatory sandbox based on the existing framework to conduct market testing of low-risk activities in a pre-defined environment.

related: Regulators say Singapore positions itself as a global cryptocurrency center

On November 2 last week, Menon emphasized that MAS is actively working to implement “very strict regulations” to reduce the foreseeable threats that accompany the adoption of encryption:

“For crypto-based activities, it is basically an investment in the future, and its form is not yet clear.”

As early as August, Singapore-based DBS Bank launched the cryptocurrency exchange DBS Bank Digital Exchange (DDEx) and obtained regulatory approval. As Cointelegraph reported, New license guarantees institutional trading of major cryptocurrencies Including Bitcoin (Bitcoin), ether (Ethereum), Ripple And Bitcoin Cash (Bitcoin cash).