DBS, a top financial services group in Asia with a presence in 18 markets and based in Singapore, has announced an initiative to create a programmable digital Singapore dollars (DSGD).
The project has the defacto approval of the Singapore government which recently indicated its support of privately issued stablecoins. The project is in partnership with Open Government Products (OGP) for a live pilot where “purpose-bound money”-based vouchers (PBM vouchers) are issued using tokenised SGD to facilitate “real-world” live transactions with selected merchants.”
This is an industry-led effort by the Monetary Authority of Singapore (MAS) and part of “Project Orchard” aimed at developing a DSGD. The digital Singapore dollar will utilize blockchain technology, including smart contracts.
DBS states that smaller businesses and retail shops will be able to take advantage of immediate settlement, payment, and collections with their banks. The goal is to boost cash flow while saving administrative time.
DBS adds that the current process involves one to two days of processing time before merchants actually see the money in their bank accounts.
PBM vouchers will remove the need for backend reconciliation while improving productivity.
Shee Tse Koon, Singapore Country Head of DBS, explained that many smaller firms would like to realise productivity gains from digital transactions but are uncertain as to how to accomplish this goal.
“The live pilot demonstrates the feasibility of programmable money to foster an even more efficient, trustworthy, and robust payment system, especially for time and resource starved businesses,” said Koon. “This solution could help businesses and NGOs leapfrog into the future of money. “Purpose bound money” will be immensely transformative especially when governments, businesses and individuals come together with a collective vision to adopt the use of digital money on inter-connected networks to realise a fully transparent and efficient global financial infrastructure for payments. It also further reinforces how blockchain technology can be the bedrock to build the next generation of payments and settlement infrastructure on – not only because of its immutability and accessibility, but also for its programmability by leveraging smart contracts.”
The live pilot is expected to involve up to 1,000 selected consumers and six merchants, including F&B outlets such as Nanyang Old Coffee, Sarnies, Pickleville, The Working Class, and The Three Anchovies for a duration of four weeks starting from October 27, 2022.
Individuals and corporates interested in experiencing the benefits of using a PBM voucher may visit the Project Orchid Booth at the Singapore FinTech Festival 2022.
Li Hongyi, Director of Open Government Products, said the PBM program demonstrates how it can simplify the Government’s voucher programs using smart contracts. He said they intend to work closely with industry partners to test concepts and will share the experience broadly.
DBS was also part of Project Ubin, an industry initiative by the MAS to explore the application of blockchain technology involving multi-currency payments and settlements since its inception in 2016.
DBS did not indicate which blockchain technology was being utilized and did not indicate next steps after the four week trial. Singapore is just one of the many jurisdictions researching digital currency.