Singapore to pilot tokenized government bonds and CBDC payments... detailed plans to be unveiled next year

Singapore is launching an experiment to settle tokenized government bonds using a central bank digital currency (CBDC). The Monetary Authority of Singapore (MAS) said it will disclose detailed plans next year and assessed that tokenized finance is entering practical use.

On the 13th, according to crypto-focused media The Block, the MAS plans to tokenize MAS bills, issue them to primary dealers, and pilot settling them using a wholesale CBDC.

Chia Der Jiun, Managing Director of the Monetary Authority of Singapore, said, "Tokenization has already moved beyond the experimental stage and is being used in commercial environments," adding, "however, several structural barriers must be resolved for large-scale adoption." He identified 24-hour settlement, reduced intermediation costs, and improved collateral efficiency as key advantages of tokenization.

He warned, however, about stablecoins outside regulatory oversight, saying, "Their peg maintenance record is unstable," and cautioned they "could trigger systemic risk similar to the 2008 money market fund collapse."

Earlier, major Singapore banks DBS, OCBC, and UOB tested interbank overnight lending transactions using a Singapore dollar (SGD)-based wholesale CBDC. This is part of a strategy to expand tokenized financial infrastructure based on a secure settlement asset.

The MAS also unveiled in August 2023 a regulatory framework for single-currency stablecoins pegged to the Singapore dollar, US dollar, euro, and others. In addition, through the Bloom Project it is supporting various pilot cases such as tokenization of bank debt and payment experiments using regulated stablecoins.