MAS explores implementing purpose-bound money for children’s digital spending at school facilities, among other uses.
SINGAPORE: The Monetary Authority of Singapore (MAS) is working to improve accessibility to the digital Singapore dollar for the general populace. The central bank aims to leverage this technology to spur further innovation in the financial markets. To that end, it is initiating two new trials focused on government payouts and credits within the first half of this year.
A trial for the digital currency, referred to as purpose-bound money, commenced during the Singapore Fintech Festival in November, engaging over 5,000 participants and 10 merchants.
From this experience, MAS gained valuable insights, according to Mr. Alan Lim, head of the authority’s FinTech Infrastructure Office, who spoke to CNA.
“Consumer feedback indicated that this system allows individuals to manage their budgets without concerns about the validity of vouchers,” he explained.
Participants did not have to worry about voucher expiration dates, as they could use them at designated stalls throughout the festival, Mr. Lim added.
Merchants benefited too, as they avoided issues related to expired vouchers and received immediate payment rather than waiting several days.
Feedback regarding user experience highlighted the importance of transparency in using programmed money, ensuring it felt seamless and engaging for consumers.
TRIALS PLANNED FOR THIS YEAR
The first trial will facilitate payouts from government agencies, such as the Central Provident Fund (CPF) Board, without requiring recipients to have a bank account.
The second trial will assess the automatic release of SkillsFuture credits to participating training providers, triggered only when eligibility criteria are met, helping to mitigate misuse.
MAS is also exploring other applications for purpose-bound money, such as enabling children to use their digital pocket money at their school’s bookstore and canteen. Another potential use includes allowing banks to disburse mortgage loans only once specific construction milestones are achieved.
These scenarios are still in the exploratory stage, with MAS prioritizing the establishment of additional controls, including measures against money laundering.
ESTABLISHING ADDITIONAL CONTROLS
“Some measures we are considering include assessing the digital readiness of potential recipients of the digital Singapore dollar,” Mr. Lim stated.
“We are also evaluating necessary user protections and the education required to enable broader segments of the population in Singapore to effectively use the digital Singapore dollar.”
MAS has clearly differentiated between cryptocurrency speculation and innovation in short asset usage, Mr. Lim added.
While digital currency is not yet widely adopted in Singapore, some businesses, like Mr. Andrew Lim’s pet food store, Kibbles, have opted to accept cryptocurrency payments.
Despite MAS’s warnings about the volatility of cryptocurrencies, Mr. Lim pointed out the advantages of this payment method, particularly regarding transaction fees.
“With credit card fees ranging from 3.5 to 4 percent, cryptocurrencies offer significantly lower fees, helping us save money,” he noted.
This payment option is also seen as secure, as it eliminates the need for third-party verification, although it constitutes only 1 percent of the store’s total transactions.
In relation to the trial of the digital Singapore dollar, Mr. Lim emphasized the importance of understanding public demand for state-issued digital currency and exploring innovative use cases.
