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India and Singapore move forward with blockchain-based payment trials

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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 like banks and interbank transactions such as securities settlement and cross-currency payments. 

The pilot program's goal is to begin testing the settlement of secondary market transactions in government securities. 

Officials with the central bank are testing to see if integrating a central bank digital currency (CBDC) into the country's financial system can help make the interbank market more efficient and help to reduce the associated transaction costs. According to the bank, having the system based on a digital rupee would "preempt the need for settlement guarantee infrastructure for collateral to mitigate settlement risk. 

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

A total of nine banks will be participating 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 for the digital rupee in the retail segment of the economy within the next month. This pilot will be limited to select locations and will involve closed user groups comprised of customers and merchants. The details for this pilot will be released at a future date.

India's central bank reveals its plans for a digital rupee

Singapore to pilot purpose-bound money-based vouchers

In Singapore, the DBS financial services group has partnered with Open Government Products, a tech team within the Singapore government, to launch a live pilot program exploring the issuance of purpose-bound 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 technology infrastructure and technical competencies 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. 

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

"The current process involves one to two days of processing time before merchants actually see the money credited into their bank accounts," DBS said. 

The live pilot is scheduled to last for four weeks, beginning on Oct. 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 areas of use for programmable money identified by DBS include "purpose-bound donations, sustainability financing, and facilitating the payment of multi-step conditional processes such as conveyancing payments in property transactions."

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