Central Bank Digital Currencies (CBDCs) are interfering with existing digital products of the financial sector as more countries test out their benefits. For example, the Chinese e-yuan has been tested since 2014, showcasing positive results for POC. The decline of digital transactions and demand for more digitized products pushed banks to consider CBDC implementation as the new banking standard.
Singapore’s Putting CBDCs to the Test
At the forefront of digitization, the Monetary Authority of Singapore (MAS) has launched a program to incentivize CBDC development, commissioning 15 companies to present their r-CBDC proof of concept during the Singapore Fintech Festival. Held between November 8th to 12th, 2021, MAS will select three winners from the 15 finalists, each receiving SGD 50,000 or the equivalent of $37,193.
Following the assessment of 300 registrants, MAS announced the selection of the 15 finalists for the Global CBDC Challenge, including participants from the fintech, technology, and banking solution sector.
MAS’s Chief Fintech Officer, Mr. Sopnendu Mohanty, stated,
"The Global CBDC Challenge aims to discover and develop retail CBDC solutions that will benefit the global community."
As part of developing a complete CBDC system for retail payments, finalists will work with Tribe Accelerator to help develop their solutions further during an eight-week acceleration phase. During the product enhancement phase, finalists will gain access to the APIX Digital Currency Sandbox “for rapid prototyping of digital currency solutions.”
It’s All in the Blockchain Network
MAS’ announcement showed that finalists include companies from 7 countries, including the United States and Singapore, accounting for 6 out of 15 participants. Singapore companies include financial services such as Citibank N.A., HSBC Bank Limited and HSBC Holdings plc, IDEMIA, IOG Singapore Pte Ltd., or Standard Chartered Bank.
Yet, Crypto Twitter was quick to illustrate the connections between other participants and known blockchain projects. For example, Crypto Poet highlighted Mojaloop, a Ripple partner, as an active candidate, yet they did not pass the selection process. Yet, Bitt and Stelar Development foundation has been selected by MAS to enter the accelerator program.
Singapore’s digitization vision pays dividends for the growth of the global crypto sector. As a fast digitized nation, Singapore has a long list of crypto exchanges seeking to enter the market, including Gemini, indicating that capital from the country can better crypto-cash flow and volume.
A survey shows 67% of Singaporeans who invest own some crypto in their portfolio, with 78% owning Ethereum. However, Singapore joined most of the Asian rhetoric on regulating crypto. The Monetary Authority of Singapore has warned Binance of possibly breaching the Payments Services Act, suggesting it should halt its regulated services in the country.
While Singapore seeks to become relevant in the digital economy, the development of CBDC is a borderline action between centralized and decentralized initiatives by the government. Insider reported in June that Singapore’s crypto-friendly approach is attracting crypto groups amid June’s crackdown; however, the country’s stance might be changing soon.
CBDCs are considered by governments as a possible fix to digital transactions; however, they do pose a threat that is nonexistent in fiat currencies. Anonymity is no longer on the table and agreeing to implement CBDCs without considering the long term digital implications can quickly spiral into a dystopian implementation.