Central banks are proposing standards for Central Bank Digital Currency (CBDC) and stablecoins. Amazon and Grab are currently testing these standards.

The Monetary Authority of Singapore (MAS) has proposed standards for using digital money, including central bank digital currencies (CBDCs) and tokenized bank deposits, on a distributed ledger.

A technical white paper was produced in collaboration with the International Monetary Fund (IMF), Banca d’Italia, Bank of Korea, financial institutions and fintech firms. The white paper proposes a common protocol that “specifies the conditions upon which an underlying digital money can be used.”

According to MAS, retailer Amazon.com (AMZN), finance company FAZZ, and superapp creator Grab are collaborating on a pilot project to test escrow arrangements for online retail transactions. Payments will be released to the merchant only after the customer receives the items purchased. The white paper covers technical specifications as well as “business and operating models for how arrangements could be programmed” to specify validity periods or types of shops when making transfers.

The white paper notes that the programmability of digital money is a point of contention. For instance, EU regulators have added a provision to digital euro legislation specifying that such a currency would not be programmable because it could limit the freedoms of use afforded by cash.

“Operators will need to ensure that programmability does not come at the expense of digital money’s ability to serve as a medium of exchange,” the white paper said. “The singleness of money should be preserved, and programmability should not limit the distribution of money and lead to fragmentation of liquidity in the system.”

The protocol is designed to work with different ledger technology and forms of money. With the standardized format, users will be able to “access digital money using the wallet provider of their choice,” the paper said.

“This collaboration among industry players and policymakers has helped achieve important advances in settlement efficiency, merchant acquisition, and user experience with the use of digital money. More importantly, it has enhanced the prospects for digital money becoming a key component of the future financial and payments landscape,” said Sopnendu Mohanty, MAS’ chief fintech officer, in a statement.

Read more: IMF Official Presents Blueprint for Cross-Border CBDCs

Edited by Sheldon Reback.

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