Singapore Exploring Tokenized Fiat and Smart Contracts

DBS, a Singapore-based financial services business, is collaborating with Open Government Products, a Singapore government IT team, to establish a live test for the issue of purpose-bound money-based (PBM) vouchers.

The vouchers are produced on a blockchain using tokenized Singapore dollars to enable “real-world” live transactions with particular merchants. This is a part of Project Orchid, a business initiative led by the Monetary Authority of Singapore (MAS) to build the technical foundation and the Singapore dollar’s programmability (DSGD). 

PBM vouchers will be produced using blockchain.com blockchain.com - social@blockchain.com Centralised ExchangeTrading AppCrypto trading and Information technology and DBS-issued DSGD, with smart contract capabilities made possible by OGP. As a result, issuers will be able to plan and manage the distribution and use of vouchers for specific recipients.

This means that when customers use digital vouchers, SMEs and firms with retail shopfronts will be able to take advantage of rapid settlement, payments, and collections with their banks. Small firms that are short on time and resources will benefit from an increase in cash flow and time savings on administrative backend activities. Currently, it takes one to two days for the money to be processed before retailers can actually see it paid into their bank accounts.

The Community Development Council voucher program, which provides Singaporean households with CDC vouchers to help them deal with growing inflation and the cost of living, may benefit from the pilot, according to DBS. The majority of these vouchers are now digital, but the retailer must still do some backend administration. However, with PBM vouchers, payments to merchants would be made instantaneously, eliminating the need for backend reconciliation and boosting productivity and efficiency.

The live test will start small, with six retailers and 1,000 carefully chosen customers.

Future PBM coupons created using tokenized SGD might assist Singapore’s 28,000 coffee shops, hawker centers, and restaurants.