Singapore’s Central Bank to Test Blockchain-Backed Digital Currency

1 min readUpdated Jun 4, 2025Nov 25, 201611:42 PM

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The Monetary Authority of Singapore (MAS) will soon test how it could issue digital currency using a v-based interbank payment system.

The planned proof-of-concept will be supported by blockchain consortium R3CEV, as well as eight banks and an unnamed local stock exchange. The Development Bank of Singapore, HSBC, Bank of America, JPMorgan, Credit Suisse and Bank of Tokyo-Mitsubishi are all said to be participating.

In a speech on Wednesday, MAS managing director Ravi Menon said the test could come to include other central banks. Further, he credited the bank’s desire to remove cost and friction from traditional bank transactions as the motivation for the effort.

Menon said:

“Today, banks have to go through correspondent banks to intermediate these payments. It takes time and adds to cost. This project marks the first step in MAS’s exploration of ways to harness the potential of central bank-issued digital currency.”

The trial would find banks depositing cash as collateral with MAS, which would then issue a digital currency to participants. The digital currency could then be exchanged among participants in the system and later redeemed for cash.

The forthcoming trial bears similarities to a previously announced effort from UBS, Deutsche Bank, Banco Santander and startup Clearmatics in August.

Called Utility Settlement Coin, the project envisioned how a central bank could issue digital currency that could then be redeemed for cash held by a central bank.

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What this means

The Monetary Authority of Singapore's digital currency trial represents a decisive push towards modernising interbank transactions. By collaborating with eight major banks and R3CEV, MAS positions Singapore at the forefront of financial innovation, directly challenging the slow, costly existing systems. This move pressures traditional financial institutions to accelerate their own blockchain explorations or risk falling behind. While some financial institutions globally have explored private digital currencies, this MAS initiative, like the Utility Settlement Coin, introduces central bank backing, lending it significant credibility. Its success would dramatically alter payment landscapes. We should closely watch MAS's subsequent announcements regarding the integration of other central banks.

Wei Zhang · Retail News Asia newsroom

Questions & Answers

Which entities are supporting the Monetary Authority of Singapore's digital currency test?

The proof-of-concept will be supported by blockchain consortium R3CEV, eight banks, and an unnamed local stock exchange. Several major banks, including HSBC and JPMorgan, are participating in the trial.

What is the primary motivation behind MAS's decision to explore a central bank-issued digital currency?

MAS aims to reduce the cost and friction associated with traditional bank transactions. The current system requires banks to use correspondent banks, which is time-consuming and expensive, according to MAS managing director Ravi Menon.

How will the digital currency trial function for participating banks?

Banks will deposit cash with MAS as collateral. MAS will then issue digital currency to these participants, which can be exchanged within the system. This digital currency can later be redeemed for cash.

Has a similar digital currency project been announced by other financial institutions?

Yes, a similar effort was announced in August by UBS, Deutsche Bank, Banco Santander, and Clearmatics. Their project, called Utility Settlement Coin, also explores central bank-issued digital currency redeemable for cash.

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