Nature of E-money

A Central Bank Digital Currency (CBDC), is the virtual form of a country’s fiat currency. It is a digital payment instrument (digital cash) issued and regulated by the central bank of a country which promotes financial inclusion or expands access to financial services along with other benefits of cryptocurrency without the associated risks. They are designed to function as a unit of account, store of value, and medium of exchange for daily transactions. 

Monetary Authority of Singapore (MAS), is assessing the case for the issuance of a retail CBDC in Singapore. MAS on 9th Nov 2021, has launched the CBDC initiative, Project Orchid, to build the infrastructure to enable a digital Singapore dollar, should Singapore decide to do so in future. MAS has also published a paper on “A Retail Central Bank Digital Currency: Economic Considerations in the Singapore Context” highlighting the strategic approach and evaluating the macro-financial risks posed by a retail CBDC in Singapore. Overall, MAS’ current view is that there is no pressing need for a retail CBDC in Singapore at this point in time.

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A central bank digital currency (CBDC) is a digital version of fiat currency that is usually issued on blockchain or other distributed ledger technology by the central bank of a country or territory.

A CBCD is a digital version of fiat currency that is usually issued on blockchain or other distributed ledger technology by the central bank of a country or territory.

CBDCs are mostly at an early stage of development and have yet to be deployed on a large scale which means not a lot is known about them yet.

However, unlike cryptocurrencies, a CBDC will be regulated by the monetary authority of the issuing country or territory and will have legal tender status. CBDCs are also expected to be more stable than most cryptocurrencies as they will be backed by monetary reserves of the country or territory.