Singapore to trial tokenized bills settled with CBDC The Monetary Authority of Singapore plans to trial the issuance of tokenized MAS bills to primary dealers settled with central bank digital currency, with details to be released next year. MAS Managing Director Chia Der Jiun said in a Thursday speech at the Singapore FinTech Festival that tokenization has matured beyond experimentation and is increasingly being deployed in commercial settings. "Are asset-backed tokens clearly out of the lab? Without a doubt," said Chia. "But have asset-backed tokens achieved escape velocity? Not yet." Chia noted that while tokenization promises round-the-clock settlement, reduced intermediaries, and more efficient collateral usage, the industry must still overcome structural hurdles before large-scale adoption is possible. Tokenization, stablecoin regulations Chia said that three Singapore banks — DBS, OCBC, and UOB — have conducted interbank overnight lending transactions using the Singapore dollar wholesale CBDC in a trial. The testing is aligned with the country's ambition to scale tokenized finance using safe settlement assets. On stablecoins, Chia pointed out that the MAS has finalized its regulatory regime and will prepare draft legislation. "Under our regime, we have given importance to sound reserve backing and redemption reliability," he said. The MAS classifies stablecoins as "digital payment tokens" under the Payment Services Act, and has introduced a framework in August 2023 for single-currency stablecoins pegged to the Singapore dollar or major currencies like the U.S. dollar and euro. Chia warned that unregulated stablecoins have a "patchy record" of keeping their pegs and could trigger systemic runs similar to 2008 money market fund failures, when funds "broke the buck." Chia also noted that the MAS has launched the BLOOM initiative to support industry experimentation with tokenized bank liabilities and regulated stablecoins for settlement.
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Singapore to trial tokenized bills settled with CBDC

The Monetary Authority of Singapore plans to trial the issuance of tokenized MAS bills to primary dealers settled with central bank digital currency, with details to be released next year.

MAS Managing Director Chia Der Jiun said in a Thursday speech at the Singapore FinTech Festival that tokenization has matured beyond experimentation and is increasingly being deployed in commercial settings.

"Are asset-backed tokens clearly out of the lab? Without a doubt," said Chia. "But have asset-backed tokens achieved escape velocity? Not yet."

Chia noted that while tokenization promises round-the-clock settlement, reduced intermediaries, and more efficient collateral usage, the industry must still overcome structural hurdles before large-scale adoption is possible.

Tokenization, stablecoin regulations

Chia said that three Singapore banks — DBS, OCBC, and UOB — have conducted interbank overnight lending transactions using the Singapore dollar wholesale CBDC in a trial. The testing is aligned with the country's ambition to scale tokenized finance using safe settlement assets.

On stablecoins, Chia pointed out that the MAS has finalized its regulatory regime and will prepare draft legislation. "Under our regime, we have given importance to sound reserve backing and redemption reliability," he said.

The MAS classifies stablecoins as "digital payment tokens" under the Payment Services Act, and has introduced a framework in August 2023 for single-currency stablecoins pegged to the Singapore dollar or major currencies like the U.S. dollar and euro.

Chia warned that unregulated stablecoins have a "patchy record" of keeping their pegs and could trigger systemic runs similar to 2008 money market fund failures, when funds "broke the buck."

Chia also noted that the MAS has launched the BLOOM initiative to support industry experimentation with tokenized bank liabilities and regulated stablecoins for settlement.