Singapore’s MAS reveals plan to issue ‘live’ CBDC for wholesale settlement

On November 16, 2023, the Monetary Authority of Singapore (MAS) announced plans to issue a live central bank digital currency (CBDC) for wholesale settlement. This will be the first time that MAS has issued a CBDC in a live environment, after previously simulating issuance within test environments.
The initial pilot will focus on settling retail payments between commercial banks. MAS plans to expand the scope of the pilot to include cross-border settlements in the future.
What is a CBDC?
A CBDC is a digital form of fiat currency that is issued and backed by a central bank. CBDCs are different from cryptocurrencies like Bitcoin in that they are not decentralized and are subject to the same regulations as traditional fiat currencies.
Why is MAS issuing a CBDC?
MAS believes that a CBDC could offer a number of advantages over traditional fiat currencies, including:

• Increased efficiency: CBDCs could help to improve the efficiency of wholesale payment systems by reducing settlement times and costs.
• Reduced risk: CBDCs could help to reduce the risk of fraud and counterfeiting.
• Financial inclusion: CBDCs could help to improve financial inclusion by providing access to digital payments for people who do not have access to traditional banking services.

What are the implications of MAS’s CBDC plans?
MAS’s plans to issue a live CBDC are significant. Singapore is one of the first major financial centers to announce plans to issue a CBDC. This suggests that MAS is serious about exploring the potential benefits of CBDCs.
MAS’s CBDC pilot could also have implications for other countries. If the pilot is successful, it could encourage other central banks to issue their own CBDCs. This could lead to a more widespread adoption of CBDCs in the future.
What does the image of Marina Bay Sands have to do with Singapore’s CBDC plans?
The image of Marina Bay Sands is a symbol of Singapore’s financial hub status. The image suggests that Singapore is at the forefront of financial innovation, including the development of CBDCs.
Conclusion
MAS’s plans to issue a live CBDC are a significant development in the world of digital currencies. The pilot will test the feasibility of using a CBDC for wholesale settlements. If the pilot is successful, it could lead to a more widespread adoption of CBDCs in the future.
It is interesting to note that MAS is choosing to issue a CBDC for wholesale settlement first. This is likely because wholesale settlements are a major source of risk and inefficiency in the global financial system. A CBDC could help to address these challenges.
It remains to be seen whether MAS’s CBDC pilot will be successful. However, the fact that MAS is willing to experiment with CBDCs is a positive sign. It shows that MAS is committed to exploring new ways to improve the efficiency and safety of the financial system.