Global Trustee and Fiduciary Services Bite-Sized Issue 12 2023

Global Trustee and Fiduciary Services Bite-Sized | Issue 12 | 2023 2 QUICK LINKS AIFMD BENCHMARK REGULATION CBDC COSTS & CHARGES CRYPTOASSETS FUND LIQUIDITY LIBOR TRANSITION MiCA OPERATIONAL RESILIENCE UK PRIIPs SUSTAINABLEFINANCE/ESG ASIA EUROPE IRELAND NORTH AMERICA UNITED KINGDOM CBDC MAS Lays Foundation for Safe and Innovative Use of Digital Money in Singapore On 16 November 2023 the Monetary Authority of Singapore (MAS) unveiled three initiatives to ensure the safe and innovative use of digital money in Singapore, namely: • A blueprint outlining the infrastructure required for a digital Singapore dollar; • Expanding digital money trials; and • A plan to issue a “live” central bank digital currency (CBDC) for wholesale settlement. The three forms of digital money that MAS is promoting are wholesale CBDCs (issued only to financial institutions for the settlement of inter-bank transactions), tokenised bank liabilities (tokens on a ledger that represent a commercial bank’s liability) and regulated stablecoins (digital payment tokens designed tomaintain a constant value against one or more specified fiat currencies). MAS’s Orchid Blueprint sets out the technology infrastructure that would be required to facilitate digital money transactions in the future. The blueprint builds on learnings from its Project Orchid industry trials, and identifies the following infrastructure building blocks for the sound use of digital money in Singapore: • Settlement ledger – to record digital money transfers, with supporting features such as native programmability and atomic settlement of digital tokens. • Tokenisation bridge – to connect existing account-based settlement systems with ledgers compatible with tokenised forms of digital money. • Programmability protocol – to use Purpose Bound Money (PBM) as a common protocol to specify the conditions for the use of digital money. • Name Service – to translate between unwieldy wallet addresses and alternative name identifiers that are readable and meaningful for verification. To test the broad applicability of PBM and digital money in Singapore, MAS will expand Project Orchid’s digital money trials. Four new trials will be undertaken with industry players to examine relevant infrastructure components and commercial models: • Tokenised bank liabilities; • Wallet interoperability; • Supplier financing; and • Institutional payment controls. To complement the digital money trials by the financial industry involving retail and corporate users, MAS will commence the development of CBDC for wholesale interbank settlement next year. MAS will pilot the “live” issuance of wholesale CBDCs for the first time, after previously simulating issuance within test environments. The first pilot will involve the use of “live” wholesale CBDC to settle retail payments between commercial banks. Future pilots could include the use of “live” wholesale CBDC for the settlement of cross-border securities trade. Link to the Orchid Blueprint here Link to Speech by Ravi Menon, Managing Director, Monetary Authority of Singapore here