Project Orchid

What is Purpose Bound Money

Purpose Bound Money (PBM) is a form of tokenized digital currency that is limited in how it can be used, similar to a voucher in practice. PBMs are specific to MAS' Project Orchid initative. 

According to MAS (Project Orchid Phase 1 Report)

PBM refers to a protocol that specifies the conditions upon which an underlying digital currency can be used. PBMs are bearer instruments, with self-contained programming logic and transferrable between two parties without intermediaries.

A crucial aspect of PBM is that the underlying digital medium of exchange bound within
it comes embedded with programmable logic that makes it possible for use across different platforms and systems.

PBMs could be used to digitalise vouchers. A voucher comes with it a predefined set
of conditions for its usage. The holder of the voucher can present it to participating merchants in exchange for goods or services (a programmable payment feature). In some instances, the terms of the voucher scheme allow it to be transferrable between people (a programmable money feature). Hence, a consumer could purchase a gift voucher and transfer it to another person who may then use it at a participating merchant. Vouchers could also be issued to support government disbursement programmes. For example, Community Development Council (CDC) vouchers5, as part of the Household Support Package in Singapore, are designed to defray the cost of living and support hawkers and heartland merchants affected by the pandemic. The vouchers are distributed

to eligible household and programmed to be spent at merchants in the heartlands.

PBM serves as digital bearer instrument, and could in effect support government payouts, Conceptually, the holder of
the PBM could present the PBM and cash out without requiring its holder having to have a bank account.

MAS elaborates that PBMs build upon 2 concepts: programmable payment and programmable money.

Programmable payment refers to the automatic execution of payments once a pre-defined
set of conditions are met.

Programmable money refers to the possibility of embedding rules within the medium of exchange itself that defines or constraints its usage.

A third model – Purpose Bound Money (PBM), which is explored in the initial phase of Project Orchid, builds upon the concept and capabilities of both programmable payment and programmable money.