India and Singapore move ahead with blockchain-based payment attempts

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(Kitco News) – The Reserve Bank of India has announced that on Tuesday it will launch the first pilot program for its digital rupee “for specific use cases”, starting in the wholesale segment of the economy. The wholesale sector includes financial institutions such as banks and interbank transactions such as securities settlement and cross-currency payments.

The aim of the pilot program is to start testing the settlement of secondary market transactions in government securities.

Officials at the central bank are testing to see if integrating a central bank digital currency (CBDC) into the country’s financial system could help make the interbank market more efficient and help reduce the associated transaction costs. According to the bank, having the system based on a digital rupee will “anticipate the need for settlement guarantee infrastructure for security to reduce settlement risk.

Once the system has been tested, several pilot programs will be launched to test other types of wholesale transactions and cross-border payments by leveraging the knowledge from the upcoming launch.

A total of nine banks will participate in the pilot test, including State Bank of India, Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Yes Bank, IDFC First Bank and HSBC.

The announcement also indicated that the central bank plans to launch the first pilot of the digital rupee in the retail segment of the economy within the next month. This pilot will be limited to selected locations and will involve closed user groups consisting of customers and sellers. The details of this pilot will be released at a later date.

Singapore to pilot purpose-based money-based vouchers

In Singapore, financial services group DBS has partnered with Open Government Products, a Singapore government technology team, to launch a live pilot program exploring the issuance of purpose-built money-based vouchers (PBM vouchers).

The vouchers will be issued using tokenized Singapore dollars hosted on a blockchain. According to the announcement, this pilot is part of “Project Orchid”, which is an effort by the Monetary Authority of Singapore (MAS) to develop the technological infrastructure and technical expertise needed to facilitate the use of a Programmable Digital Singapore Dollar (DSGD ).

Through the partnership, DBS will issue digital Singapore dollars, while Open Government Products will enable smart contract capabilities.

The use of vouchers is expected to benefit small and medium-sized enterprises (SMEs) and storefronts by allowing instant settlement, payments and collections with their banks, helping to increase cash flow and save time on administrative tasks.

“The current process involves a one to two day processing time before merchants actually see the money credited to their bank accounts,” DBS said.

The live pilot is scheduled to run for four weeks, starting on October 27. “Up to 1,000 selected customers” will participate in the pilot along with six merchants including Nanyang Old Coffee, Sarnies, Pickleville, The Working Class and The Three Anchovies.

Other potential uses for programmable money identified by the DBS include “targeted endowments, sustainability financing and facilitating the payment of multi-step contingent processes such as the mediation of payments in real estate transactions.”