Head of the Monetary Authority of Singapore Ravi Menon
Head of the Monetary Authority of Singapore Ravi Menon. Yen Meng Jiin/The Business Times

Singapore’s central bank is considering joining hands with China in exploring Central Bank Digital Currency (CBDC), an executive of the bank said on 19 June.

During a financial forum in Shanghai, the managing director of the Monetary Authority of Singapore (MAS), Ravi Menon, said that his country was ready to enter a close cooperation with China when it comes to digital currencies. During his speech, Menon mentioned China’s progress in developing their own CBDC, also known as the digital yuan, and said that Singapore was looking to exchange knowledge and expertise with China in this sector.

He also noted that the central banks of the two countries, the Monetary Authority of Singapore and the People’s Bank of China, are discussing different CBDC development scenarios. While the reason to develop a CBDC varied from country to country, Menon insisted that the primary goal of Singapore was to cut cross-border payments and settlement costs, reduce settlement time, and ensure transaction security.

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Singapore’s central bank and financial regulator has been working on its blockchain-based interbank payment project, called “Project Ubin”, since late 2016. Officially unveiled in 2018, the project is a collaborative effort that aims to explore the use of blockchain technology for clearing and settlement of securities and payments.

Menon did not leave Facebook’s troubled stablecoin project, Libra, out of his speech. He acknowledged that the project was a big challenge for the central bank system, but agreed that it offers great flexibility, considering the entire Libra team had committed to working hand in hand with global regulators. Since its announcement in June 2019, Libra has encountered a number of regulatory challenges from governments and central banks around the world. The extensive regulatory pressure even resulted in some of Libra’s members leaving the project.

China has been developing its digital yuan for a while now, but in 2019 reports emerged that claimed the country had hastened the development of their CBDC in an attempt to release it before Libra becomes available. Though there is still no launch date for the digital yuan, it is purportedly being tested in some cities in the country. China may still speed up its release, so that it could facilitate and manage a large-scale post-COVID-19 stimulus.

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