Singapore is set to launch its wholesale central bank digital currency at the start of next year.
At the Singapore FinTech Festival last week, Ravi Menon, Managing Director of the Monetary Authority of Singapore (MAS), announced that Singapore’s central bank will be working with local banks to pilot the use of wholesale CBDCs.
This isn’t Singapore’s first foray into CBDCs. The country has been testing the use of wholesale CBDCs since 2016, primarily using them on distributed ledgers to enable real-time cross border payments and settlements with central banks. One of its first pilot projects, Project Ubin, experimented with the use of blockchain and digital ledger technology to clear and settle payments and securities.
CBDC Interest Continues to Grow
CBDCs are emerging as the central banks’ response to the growing concern around cryptocurrency. Despite the popularity and controversy surrounding crypto, central banks aim to sidestep potential instabilities associated with them. Their focus is on providing consumers with fast, secure, and efficient payments solutions. By issuing and operating CBDCs a the state level, central banks are hoping to instill a sense of stability in the digital currency ecosystem, mitigating the uncertainties often linked to decentralized cryptocurrencies.
According to the Atlantic Council’s CBDC tracker, 130 countries are currently exploring a CBDC, which constitutes 98% of the global GDP.
During the Singapore FinTech Festival, Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), encouraged governments and central banks to ramp up their adoption efforts towards CBDCs, and how by doing so, they can vastly enhance cross-border payments, making them faster and more cost-efficient, as well as reach the unbanked.
The IMF also launched its Central Bank Digital Currency Virtual Handbook as a reference guide for experts and policymakers at central banks as well as ministries of finance. Its aim is to cover any questions policymakers might have about implementing CBDCs, including what frameworks to use when exploring CBDCs and CBDC product development, just to name a few.
“The year 2024 will be one of continued exploration and development in CBDCs, particularly on the wholesale side,” said Joel Hugentobler, Analyst for Cryptocurrency at Javelin Strategy & Research. “There are already systems and industry standards in place in which a wholesale CBDC can be implemented easier than a retail option. There are 130 countries involved in varying degrees of development or research in CBDCs and we’ve passed the point of no return a while ago. CBDCs, whether we like it or not, are here to stay so it’s important to do your own research of the technology, weigh the pros and cons, and look at the facts rather than follow narratives.”
