Singapore's digital currency "Project Ubin" pilot, DBS Bank and the government collaborate to settle payments using vouchers

DBS Bank, a financial services group headquartered in Singapore, is collaborating with the Singapore government's technology team, Open Government Products (OGP), to conduct the first pilot of the Orchid Project. The goal is to enable retail stores to make instant settlements, payments, and receipts by allowing customers to use digital vouchers issued on a digital currency platform. It is claimed that this method can increase cash flow and save time on backend management.

Project Orchid

Project Orchid is a project proposed by the Monetary Authority of Singapore (MAS) at the 2021 Singapore FinTech Festival. It is a multi-phase exploratory project aimed at researching various designs and technical aspects related to Singapore's retail Central Bank Digital Currency (CBDC) system, from functional aspects to connections with existing payment infrastructure. While MAS assesses that there is currently no urgent need for CBDC in Singapore, it continues with the project to pave the way for enhancing Singapore's financial infrastructure.

Purpose-Bound Money (PBM)

In the first phase goal of Project Orchid, Purpose-Bound Money (PBM) is established on the concept and functionality of programmable payments and programmable currency. PBM refers to a protocol that allows specified conditions to be programmed through smart contracts, such as specifying payment dates or restricting use to specific stores. PBM is an anonymous tool with independent programming logic that can be transferred between parties without intermediaries. The default use cases in Project Orchid include paying taxes, corporate vouchers and loyalty points, as well as purpose-driven donations.

At this year's Singapore FinTech Festival SFF 2022, DBS Bank and the Open Government Products division of the Government Technology Agency of Singapore (OGP) will test using PBM to make payments to specific stores in the form of vouchers. Trial participants can use the PBM vouchers programmed through smart contracts at participating F&B outlets, and upon receipt, merchants can redeem them directly for the underlying digital Singapore Dollar. This trial is expected to involve 6 merchants and 1000 users.

The first phase pilot also includes commercial digital vouchers by Temasek, government payments by OCBC and the Central Provident Fund Board (CPFB), and learning account management by UOB and SkillsFuture Singapore (SSG).

Sopnendu Mohanty, Chief FinTech Officer at MAS, stated:

The introduction of digital currencies provides the ability to store value electronically and carry it with you. Digital currencies go beyond that, allowing funds to be programmed and used for specific purposes. Through practical experiments in the industry, we deepen our understanding of the potential uses of digital currencies and the infrastructure needed to support them. We look forward to further collaboration with industry participants and policymakers in the subsequent phases of Project Orchid.

Project Orchid currently does not have a pre-constructed CBDC ledger but adopts a user-driven approach. The first phase of the project aims to discover the potential uses of programmable digital Singapore Dollar and the required infrastructure. Subsequent phases will explore the best ledger technology for constructing CBDC and its connection to existing financial market infrastructure.