ProjectOrchidProgrammableDigitalSGDContents02\ FOREWORD04\ EXECUTIVESUMMARY\06\ 1—PROJECTORCHIDINTRODUCTION08\ 2—MOTIVATION12\ 3—PURPOSE-BOUNDMONEY(PBM)OVERVIEW\3.1PBMArchitecture\3.2DigitalCurrenciesbackingPBM\3.3PBMWrapper\3.4PBMInfrastructure\3.5PBMWallets\18\ 4—PBMUSAGEPATTERNS\4.1GovernmenttoPerson\\4.2PersontoGovernment\\4.3CorporationtoPerson\\4.4PersontoCorporation\4.5PersontoPerson\28\ 5—PBMFUNCTIONALOVERVIEW\5.1PBMLifecycleStages\\5.2PBMRolesandResponsibilities\5.3PBMOn-ramp&Off-ramp32\ 36—DESIGNCONSIDERATIONS\6.1Interoperability\\6.2FungibilityofdigitalSGDacrossissuers\36.3UserProtection\36.4OperationalCost\36.5DigitalReadiness\36.6Security\367.7Anti\-MoneyLaunderingandTerroristFinancingRisks38\ 37—CASESTUDIES\73.1CaseStudy1–GovernmentVouchers\37.2CaseStudy2–CommercialVouchers\37.3CaseStudy3–GovernmentPay-outs\37.4CaseStudy4–LearningAccount48\ 8—SUMMARYANDNEXTSTEPS50\ 9—ACKNOWLEDGEMENTS\Annex31:CentralBankDigitalCurrency\3Annex2:TokenisedDeposits\3Annex4:GlossaryofTermsForewordDigitalassetsenabledthroughtheinnovativecombinationoftokenisationanddistributedledgersoffertransformativeeconomicpotential.Tokenisationenablesanythingofvaluetoberepresentedindigitalform,storedandexchangedonaledgerthatkeepsanimmutablerecordofalltransactions.Ifdoneright,thedigitalassetecosystemcouldpotentiallyfacilitatemoreefficienttransactions,enhancefinancialinclusion,andunlockeconomicvalue.Itcouldimprovefinancialservices–acommongoalsharedbyMAS,thefinancialindustryandtheFinTechcommunity.However,likeallinnovations,digitalassetactivitiesposerisksaswellasbenefits.MAS’visionistobuildaninnovativeandresponsibledigitalassetecosysteminSingapore.Thedevelopmentstrategyandregulatoryapproachfordigitalassetsgohand-in-handtowardsachievingthis.MAS’developmentstrategymakesSingaporeoneofthemostconduciveandfacilitativejurisdictionsfordigitalassets.Atthesametime,MAS’evolvingregulatoryapproachmakesSingaporeoneofthemostcomprehensiveinmanagingtherisksofdigitalassets,andamongthestrictestinareaslikediscouragingretailinvestmentsincryptocurrencies.Innovationthroughindustrycollaborationiskeytogrowingthedigitalassetecosystem.Tosupportthedevelopmentofadigitalassetecosystem,weneedthesupportinginfrastructureformediumsofexchangetofacilitatetransactions.AnongoingfocusforMASistostrengthenourdigitalcurrencyconnectivitybydevelopingtheinfrastructureandtechnicalcompetenciesnecessarytoissueadigitalSingaporedollar(SGD).However,theonlywaytofindoutwhatworksisthroughexperimentationandexploration–“l(fā)earningbydoing”.Policymakersandinstitutionscouldbenefitfrombuildingtheirownarchetypesofpossibledesignchoicesforadigitalcurrency-basedinfrastructuretopromotedebateandinnovationmovingforward.ProjectOrchidanditsexperimentsareastepforwardinadvancingthegloballearningonthepossibilityofprogrammablemoneyandpayments.RatherthanbuildingaCentralBankDigitalCurrency(CBDC)ledgerfirst,theprojecthastakenauserdrivenapproachinstead.ThefirstphaseoftheprojectaimstouncoverapotentialusecasesforaprogrammabledigitalSGDandtheinfrastructurerequired.ThesubsequentphaseofProjectOrchidwillinvestigatetheoptimalledgertechnologytoissueaCBDCaswellasitsintegrationtoexistingfinancialmarketinfrastructure.Theprojectseekstoapproachthesubjectofenablinganinnovative,interoperable,andinclusivedigitalcurrencyinfrastructureinanopen-sourcedmanner,withaviewofharnessingcollectivecontributionsofthecommunityandcontributingthelearningpointstotheglobalFinTechcommunity.SOPNENDUMOHANTYCHIEFFINTECHOFFICER,MONETARYAUTHORITYOFSINGAPOREPROJECTORCHID-PROGRAMMABILITYOFDIGITALSGDExecutiveSummaryApotentialfuturedigitalSGDwillneedtointeractwithdifferentformsofdigitalassetsandbeinteroperableacrossdifferentfinancialinfrastructures.ThisreportbeginswithanoverviewofProjectOrchid,themotivationforprogrammablemoneyandhowitsupportsadigitalassetecosystem.ThereportintroducestheconceptofPurposeBoundMoney(PBM)andthepotentialbenefitsofprogrammabledigitalcurrencythroughillustrativeusecasescontributedbyindustryparticipantsandgovernmentagencies.Centralbanks,includingMAS,wouldhavetoassesswhichcombinationoffinancialinfrastructureandtechnologybestalignswithitspolicygoals.AnimportantconsiderationstudiedinthisreportwasinteroperabilitywithotherformsofdigitalassetsthroughPBMasthecommoninterfacelayer.AlthoughMASdoesnotseeanurgentcaseforretailCBDC,itisenvisionedthatthestudyofpotentialusecasesforaprogrammabledigitalSGDandtheinfrastructurerequired,wouldenable

MASandthefinancialservicesecosysteminSingaporetodevelopcapabilitiestosupportaretailCBDCshouldtheneedarises.ThesubsequentchaptersdiscusssolutionapproachesforimplementingPBMthroughacommoninterfaceandhowitmightworkwithvariousunderlyingmediumofexchanges,mainlyCBDCs,tokeniseddepositsandstablecoins.ThereportdiscussesthedesignconsiderationsforimplementingPBMandfeaturesfourcasestudiesbasedonongoingtrialsthathavebeeninitiatedtosupporttheexperimentsofPBMandadigitalSGD.Thetrialsstudiedthefeasibilityofpublicblockchainandtheirequivalentprivateimplementations,thoughtheirinclusionisforexperimentalpurposesonly,andshouldnotbeinferredasanendorsementontheirsuitabilityasfinancialmarketinfrastructures.ThereportconcludesbyprovidingasummaryoflessonslearntandaroadmapforfutureworkunderProjectOrchid.PROJECTORCHID-PROGRAMMABILITYOFDIGITALSGD

1 ProjectOrchidIntroductionSince1967,Singaporehasdesignedandissueditsownnationalcurrency.ThefirstSingaporedollarnotescirculatedwereknownastheOrchidSeries,forthesprayoforchidsfeaturedinthecentreofthefrontofeachnote.MAShasactivelyexperimentedwithcentralbankdigitalcurrencies(CBDCs)anddistributedledgertechnologies(DLT)incollaborationwiththefinancialindustryandothercentralbanks,beginningwithProjectUbinin2016.MAS’experimentsto-datehaveprimarilyfocusedonwholesalecross-bordertransactionsinvolvingfinancialinstitutions,inrecognitionoftheirpotentialtoaddresslongstandingandemergingchallengesinpayments.ProjectOrchid,launchedattheSingaporeFinTechFestival(SFF)2021,marksthefirstextensionoftheseexperimentsintothedomesticretailpaymentspace(seefig1).TheoverarchingobjectiveofProjectOrchidistobuildthefoundationaltechnologyinfrastructureandtechnicalcompetenciesnecessarytoissuearetailCBDC(i.e.,adigitalversionofSingaporedollarcash),shouldSingaporedecidetodosointhefuture.○\MAShasassessed1thatthereisnourgentneedforaretailCBDCinSingaporeatthispointintime.2TheusecasesforaretailCBDCareunclear,giventhatelectronicpaymentsinSingaporearepervasive,andhouseholdsandfirmsinSingaporearealreadyabletotransactdigitallyinafast,secureandseamlessmannertoday.○\However,MAShasnotruledouttheintroductionofaretailCBDCatsomestageinthefuture,inlightofthedynamicnatureofthepayment

landscape,evolvingconsumerpreferencesandlikelygrowthofthedigitalassetecosystem.3ThecaseforaretailCBDCinSingaporecouldstrengthenovertime,especiallyifinnovativeusesemergeortherearesignsthatdigitalcurrenciesnotdenominatedinSGDaregainingtractionasamediumofexchangelocally.ProjectOrchidisintendedtobeamulti-year,multi-phaseexploratoryprojectexaminingthevariousdesignandtechnicalaspectspertinenttoaretailCBDCsystemforSingapore,fromitsfunctionalitiestoitsinteractionwithexistingpaymentinfrastructures.ProjectOrchidwillbuildonthelearningsfromtheGlobalCBDCChallengeorganisedbyMASanditsglobalpartnersin2021.4Initsfirstphase,MAShaspartneredthepublicandprivatesectorstoinvestigatethepossibilitiesaroundprogrammabilityofadigitalcurrency.Forthepurposesofthispaper,tokeniseddepositsstablecoinsandCBDCsarereferredtoasdigitalcurrency.ProgrammabilityisakeyenablerofsomeofthecommonlycitedusecasesforaretailCBDC,evenasitisneitheraninherentnoruniquefeatureofaretailCBDC.AprogrammableretailCBDC,togetherwithasetofwell-designedsmartcontracts,couldfacilitatemoreefficientdisbursementofhighlytargetedorin-kindfiscalsupport(e.g.,tourismvouchers)andsupportnewbusinessandoperatingmodels(e.g.,seamlessmachine-to-machinetransactions)..sg/-/media/MAS/EPG/Monographs-or-Information-Paper/A-retail-CBDC---Economic-Considerations-in-the-Singapore-Context.pdfMonetary\AuthorityofSingapore(2021),ARetailCentralBankDigitalCurrency:EconomicConsiderationsintheSingaporeContext,November.A\digitalassetisanythingofvaluewhoseownershipisrepresentedinadigitalorcomputerizedform.Itcouldbeafinancialassetlikeabond,arealassetlikeartwork,orevenanintangibleitemlikecomputingresources.Digitalassetsaretypicallydeployedondistributedledgersthatrecordtheownershipandtransferofownershipoftheseassets.The\GlobalCBDCChallengeisorganisedbyMAS,inpartnershipwithIMF,WorldBank,ADB,UNCDF,UNHCR,UNDPandOECD,thatseeksinnovativeretailCBDCsolutionstoenhancepaymentefficienciesandpromotefinancialinclusion.2016ProjectUbinPhase1TokenisedSGD2017ProjectUbinPhase2Re-imaginingRTGS2018ProjectUbinPhase3DeliveryversusPayment(DvP)2019ProjectUbinPhase4Cross-BorderPaymentversusPayment(PvP)2020ProjectUbinPhase5EnablingBroadEcosystemCollaboration2021GlobalCBDCChallenge2021InnovativeretailCBDCSolutionsARetailCentralBankDigitalCurrencyEconomicconsiderationsintheSingaporecontext2022ProjectDunbarProjectOrchid InternationalSelementsusingmulti-CBDCProgrammabilityofDigitalSGD2023-OtherCrossBorderDigitalCurrencyConnectivityInitiatives

PROJECTORCHIDINTRODUCTIONFigure1:DigitalCurrencyInitiativesOFDIGITALSGD

2 MotivationPROJECTORCHID-PROGRAMMABILITY

Foundationaldigitalinfrastructurewhichsupportsdigitalidentity,dataexchange,andinteroperablepayments,playanimportantroleinenablingfinancialservicestobeaccessedbyawidersetofthepopulationandsupporteconomicandsocialdevelopment.Businessesandinnovatorscouldbuilduponthesefoundationalinfrastructurestodevelopinnovativeservices,leadingtomoreefficientandaffordableserviceswithbetteruserexperiences.Oneareawheresignificantstrideshavebeenmadeinrecentyearsisthedevelopmentoftheconceptofprogrammablepaymentandmorerecentlyprogrammablemoneypopularisedwiththeblockchainandpeertopeermoneymovement.Programmablepaymentreferstotheautomaticexecutionofpaymentsonceapre-definedsetofconditionsaremet.Forexample,dailyspendinglimitsorrecurringpaymentscouldbedefined,similartodirectdebitsandstandingorders.Today,programmablepaymentsarecommonlyimplementedthroughsettingupdatabasetriggersorintheformofApplicationProgrammingInterface(API)gatewaysthatsitsbetweentheaccountingledgerandtheclientapplication.Theseprogramminginterfacesinteractwithtraditionalledgersandadjustbankaccountbalancesbasedonprogrammedlogic.Programmablemoneyreferstothepossibilityofembeddingruleswithinthemediumofexchangeitselfthatdefinesorconstraintsitsusage.Forexample,rulescouldbedefinedsuchthatthemediumofexchangecouldbedenominatedinfractionalunitsofuptoeighteenthdecimalplaces.Programmablemoneyimplementationsincludetokeniseddeposits,stablecoinsandCBDCs.Unlikeprogrammablepayment,wherebytheprogramminglogicandthevalueitselfaredecoupled,programmablemoneyisself-containedandcontainsbothprogramminglogicandservesasastoreofvalue.Whenithasbeentransferredtoanotherparty,thelogicandrulesaremovedaswell.Programmablepayment’sadvantageisitsabilitytodefineasetofprogramminglogicorconditionsthatcouldbeappliedacrossavarietyofdifferentformsofmoney.Meanwhile,programmablemoney

hastheadvantageofbeingself-containedandtransferrableonapeer-to-peerbasisbetweenparties.Athirdmodel–PurposeBoundMoney(PBM),whichisexploredintheinitialphaseofProjectOrchid,buildsupontheconceptandcapabilitiesofbothprogrammablepaymentandprogrammablemoney.PBMreferstoaprotocolthatspecifiestheconditionsuponwhichanunderlyingdigitalcurrencycanbeused.PBMsarebearerinstruments,withself-containedprogramminglogicandtransferrablebetweentwopartieswithoutintermediaries.AcrucialaspectofPBMisthattheunderlyingdigitalmediumofexchangeboundwithinitcomesembeddedwithprogrammablelogicthatmakesitpossibleforuseacrossdifferentplatformsandsystems.PBMscouldbeusedtodigitalisevouchers.Avouchercomeswithitapredefinedsetofconditionsforitsusage.Theholderofthevouchercanpresentittoparticipatingmerchantsinexchangeforgoodsorservices(aprogrammablepaymentfeature).Insomeinstances,thetermsofthevoucherschemeallowittobetransferrablebetweenpeople(aprogrammablemoneyfeature).Hence,aconsumercouldpurchaseagiftvoucherandtransferittoanotherpersonwhomaythenuseitataparticipatingmerchant.Voucherscouldalsobeissuedtosupportgovernmentdisbursementprogrammes.Forexample,CommunityDevelopmentCouncil(CDC)vouchers5,aspartoftheHouseholdSupportPackageinSingapore,aredesignedtodefraythecostoflivingandsupporthawkersandheartlandmerchantsaffectedbythepandemic.Thevouchersaredistributedtoeligiblehouseholdandprogrammedtobespentatmerchantsintheheartlands.PBMservesasdigitalbearerinstrument,andcouldineffectsupportgovernmentpayouts,Conceptually,theholderofthePBMcouldpresentthePBMandcashoutwithoutrequiringitsholderhavingtohaveabankaccount..sg/news-publications/press-releases/1.5-billion-support-package-to-provide-targeted-relief-for-lower-income-households-and-vulnerable-groupsModel1 Model2 Model3ProgrammablePayments ProgrammableMoney PurposeBoundMoney

MOTIVATIONLegendProgrammingLogicStoreofValueFigure2:PossiblemodelsofprogrammabledigitalcurrencyProliferationofSchemesTheproliferationofschemesandplatforms,increasesthecomplexityandthechallengeusersface.Voucherschemestodayoftenoperateonseparatedistributionchannelswithdistinctfeaturesfordifferentschemes.Forexample,CDCvouchersareclaimedthroughtheRedeemSG6system,anddigitalGrabvouchersareredeemedviatheGrabmobileapplication.Participatingmerchantswouldhavetotraintheirretailstafftobeabletohandleandacceptdifferentvouchers.Thiscouldbeonerous,andtherecouldbemistakesmadeduetounfamiliarity.Private,independenteffortstoconsolidatevouchersintoasingleplatformseektostreamlinetheuserexperience.Torealisethepotentialofdigitalisation,theseeffortsneedtogofurthertoensureitisopenandinteroperabilityacrossvoucherschemes.Itshouldnotlimitinteroperabilityandaccesstoonlyconsumersandmerchantswhoaresubscribedtotheirplatform.Interoperablevouchersandpaymentssystemswillallowgreaterflexibilityandprovideseamlesspaymentexperienceforbusinessesandconsumersalike.DeviationfromintendedpurposesTherisksofmisappropriationanddeviationfrompurposesspecifiedinavoucher’stermsandconditionsisapersistentconcern.Forexample,withdirectpay-outstoaperson’sbankaccountortheuseofcheques,itisnotpossibleforthesendertodirectthattherecipientsspenditatapprovedmerchantsandnotonvices.AdministrativeoverheadCampaignorganisersneedtotypicallyfigureoutahostofadministrativeissues.Theywouldneedtofigureoutoperations-e.g.distributionof

vouchersacrossdifferentchannels,trackingvoucherredemptions,troubleshootingdisputes.Currently,eventhoughmerchantsmayhavebeenonboardedtoaparticularsystem(e.g.onboardedtotheRedeemSGsystem),theywouldstillneedtosignacontractwithcampaignorganiserstoagreetoacceptvouchersforeachnewcampaignitsupports.Inaddition,underexistingvoucherschemes,participatingmerchantsdonotreceivefundsimmediately.Aftersubmittingaclaimtothevoucherissuerandwaitingfordaysorweeks,thesumisvalidatedandtheamountiscreditedtothemerchants’bankaccounts.PBMdefinesacommoninterfacelayerthatcanbeusedbetweendifferentpaymentserviceproviders,merchantsandendconsumerstointeractwithoneanotherwithoutexpensiveorproprietary3rdpartyequipmentorinstitutionstoreceivepayments,nordotheyhavetobuildbilateralnetworksuniqueonlytothepartiesinvolvedinthetransaction.ProviderscouldbuilduponthePBMstandardtofosterinnovationwhilestillensuringcompatibilitywithvariousdevicesandacollaborativefinancialecosystem.TheintroductionofPBMcouldfacilitategrantdisbursementsandmitigatefraudandmisusebyembeddingintrinsicconditionswhichgoverntheuseoftheunderlyingdigitalcurrencies.OtherexamplesoftheusagepatternsofPBMarediscussedinSection4ofthisreport.RedeemSG\isavouchersystemthathelpsSingaporeGovernmentagencieseasilycreate,issueandtracktheredemptionofvouchers.ItalsoenablesmerchantstoeasilyacceptGovernmentissuedvouchers.\\3

PROJECTORCHID-PROGRAMMABILITYOFDIGITALSGD\3ECTORCHID-PROGRAMMABILITYOFDIGITALSGD

\ Purpose-BoundMoneyOverviewTheconceptscoveredinthissectionserveasthebasisfordiscussingthefunctionalitiesofPBM,theirbenefitsandrisksandinvestigatehowtheycouldbesupportedbydifferentunderlyingdigitalcurrenciesacrossdifferentrealworldusecases.3.1PBMArchitecturePROJ

CommercialGovernmentOtherUseVoucherDisbursementCasesERC-1155formultipleERC-20forsingleissuer,issuers,multipleconsumersmultipleconsumers1ProgrammedBusinessLogic4OnlyinteractwiththePBMwrapperforP2Ptransfer,paymentsetc.PBMWrapperCollateralDirectlyreceive5underlyingcollateral,whenreceivingpaymentsIssuerslockincollateraltocreatePBMReceive3On-rampedCBDCDigitaltokensPBMIssuersTokenisedDepositsStablecoins2On-O?RampSolutionsSendFiatLegend

Wallets FiatAccountsConsumerConsumerConsumerMerchantsMerchantsMerchantsSenddigitaltokenstoo?-rampReceiveo?-rampedflatSGDSelf-custodyThird-PartyCustodyPBMTokensFungibleDigitaltokensOrderoftheflowFigure3:PBMArchitectureDiagram\APBMbasedarchitecturehasfourdistinctcomponents.1.\DigitalcurrencybackingPBMThedigitalcurrencybackingaPBMservesascollateralforthePBM.WhentheconditionsofaPBMarefulfilled,theunderlyingdigitalcurrencyisreleased,andownershipistransferredtothetargetrecipient.Tobeutilisedasabackingdigitalcurrency,adigitalassetneedstobeagoodstoreofvalue,unitofaccountandamediumofexchange.BackingdigitalcurrenciescouldcomeintheformofCBDCs,tokeniseddepositsorstablecoinsthatareproperlyregulatedinamannerthatprovidesconfidenceinthestabilityoftheirvalue(hereinknownas“securelybackedstablecoins”).BackingdigitalcurrenciescouldbeimplementedasanERC-20fungibletokensmartcontract.2.\PBMWrapperThePBMWrapperimplementedintheformofsmartcontractcodespecifiestheconditionsuponwhichanunderlyingdigitalcurrencycanbeused.ThePBMWrappercouldbeprogrammedwherebythePBMcanonlybeutilisedforitsintendedpurposes,suchasvaliditywithinacertainperiod,atspecificretailers,andinpredetermineddenominations.OncetheconditionsspecifiedinthePBMWrapperaremet,theunderlyingbackingdigitalcurrencywillbereleased,andtransferredtotherecipient.Forexample,thepurposelayercouldbeimplementedasanERC1155Semi-FungibleTokensmartcontract.7

3.\PBMInfrastructureTheownershipofadigitalcurrencyandthesmartcontractsgoverningitsusageareexecuteduponaledger-basedinfrastructure.ThePBMinfrastructureestablishesthefoundationfortheimplementationofProgrammableMoneyandenablesnewpossibilitiesforinteractionsamongconsumers,merchants,financialinstitutions,andgovernmentagencies.Theledger-basedinfrastructurecouldbeDLTornon-DLTbased.4.\PBMWalletPBMwalletsareusedbyuserstosendandreceivePBMsandtherespectivebackingdigitalcurrencies.Theyrefertocryptographicwalletswhicharesoftwareprogrammesthatholdusers’privatekeysthatgrantsthemaccesstoPBMs.3.2DigitalCurrenciesbackingPBMInadditiontoaretailCBDC,PBMtechnologyisalsodesignedtoworkwithotherpromisingformsofdigitalcurrenciesthatcouldcirculateasprogrammable“money”inthefuture,namelytokeniseddepositsand“securelybacked”stablecoins.Anyformofelectronicordigitalmoneycanbeconsideredintwoparts:themonetaryinstrumentitselfandthesupportinginfrastructurethatallowsbalancestobemanagedandtransferred.WhilethestartingpointisaretailCBDC,thePBMtechnologyhasbeendesignedtobe

PURPOSE-BOUNDMONEYOVERVIEWCBDCFinancial MerchantInstitutionTokenisedDepositsStablecoinPurposeBoundMoney(PBM)Figure4:IllustrationofDigitalcurrenciesbackingPBMRetailUserEthereum\RequestforComments(ERC)arespecificationsforEthereumapplications,suchastokenstandards,nameregistries,libraryformats,and\\packageformats.ERC-1155isatokenstandardthatenablestheefficienttransferoffungibleandnon-fungibletokensinasingletransaction.HID-PROGRAMMABILITYOFDIGITALSGD

TheinclusionofemergingformsofdigitalcurrenciesinthedesignofthePBMissolelyforexperimentalandexploratorypurposesbasedontechnicalgroundsandinrecognitionofthepotentialtheymaypresent.PROJECTORC

agnostictothetypeofliabilityunderlyingit.Threeconsiderationsunderpinthisdesignchoice:First,MASexpectsthat,asamonetaryinstrument,anyfutureretailCBDCwillonlyformasmallpartofourmoneysupply,playingausefulbutultimatelyconstrainedroleintheeconomyjustlikephysicalcash.Today,banknotesandcoinsissuedbyMASonlyaccountforaround8%ofourentiremoneysupply,withprivatelyissuedmoneyintheformofbankdepositsmakinguptheremaining92%.Second,theretailCBDCsystemwillformpartofSingapore’snationalfoundationaldigitalinfrastructure,whichbringstogetherpayments,digitalidentityanddataexchangeandauthorisationandconsentmechanismstoprotecttheprivacyandwelfareofindividualsmoreholistically.Asapublicpaymentrail,itisexpectedtoplayanimportantroleinensuringthattheminimumstandardsrequiredofpayments(e.g.,intermsofsafety,speed,convenienceandfees)arepresent.MASthusenvisagestheretailCBDCsystemtobeacommonandopenback-endplatformthatisfullyinteroperablewithotherexistingpaymentsystems.Lastly,andtoasmallerextent,MASismindfulthatthecaseforaretailCBDCinSingaporeremainsopenatthispoint.Therapidpaceatwhichinnovationsareunfoldinggloballyalsomeansthatitisstilltooearlyatthispointintimetotellhowthefutureofmoneyandpaymentswillultimatelypanout.Againsttheseuncertainties,itisMAS’hopethatintheprocessofbuildingupthenecessarytechnicalcapabilitiestoissuearetailCBDC,MASisabletocontributetothecommonpoolofknowledgethatwillbeusedtoadvancethestateofpayments,regardlessofoureventualdecision.ThesereasonssuggestthatforthePBMtechnologytobe“future-ready”andinlinewithMAS’vision,itshouldideallybecompatiblewithotheremergingformsofdigitalcurrenciesthat

couldpotentiallycirculateas“money”inthefuture(i.e.,amediumofexchangewidelyacceptedforpaymentofgoodsandservicesintherealeconomy,astablestoreofvalue,andaunitofaccount).Basedoncurrentdevelopments,possiblecandidates(withvaryingdegreesoflikelihood)aresyntheticCBDCs,tokeniseddepositsand“securelybacked”stablecoins.Cryptocurrencies(e.g.,bitcoin)andotherformsofstablecoins(e.g.,commodity-backedorunbackedandwhichadoptanalgorithmicmechanismtomaintainstability)–basedontheircharacteristicstoday–areunlikelytohavepotentialtobecirculatedas“money”.Account-basedmodelstypicallysupportsprogrammablepaymentswhiletoken-basedmodelssuchasCBDCsandtokeniseddepositsareProgrammableMoneywithrulesembeddedwithinthemoneyitself.PBMwrapstheProgrammableMoneywithconditionsthatwillexpireoncetheyhavebeenmet.UndertheinitialphaseofProjectOrchid,participatingfinancialinstitutionsandgovernmentagenciestestedPBMwithtokeniseddepositoranexistingSGD-denominatedstablecoin.FuturephasesoftheprojectmayincludetestingwithanMASissuedCBDC.TheinclusionofemergingformsofdigitalcurrenciesinthedesignofthePBMissolelyforexperimentalandexploratorypurposesbasedontechnicalgroundsandinrecognitionofthepotentialtheymaypresent.Foreditorialpurposes,CBDCs,tokeniseddepositsandsecurelybackedstablecoinsissuedbyregulatedfinancialinstitutions,whicharedenominatedinSGD,arecollectivelyreferredtoas“DigitalSGD”inthisreport.3.3PBMWrapperPBMcanbecreatedfromthedistincttypesofdigitalcurrencies,highlightedintheearliersection,throughwrappingthesedigital\currenciesinthePBMsmartcontract.AfterthePBMhasbeencreated,itisdistributedtotheconsumers.ConsumerswillonlyinteractwithPBMinitswrappedform,andtheydonothavetomanageorhandletheunderlyingdigitalcurrency.Consequently,thereisnoneedforvoucherissuerstoissuetheirownpaymentinstrument.Essentially,PBMCreatorsarenotissuingnewpaymentinstrumentsasPBMsatta