Economic Affairs

Welcome to a cashless world: CBDC may be the future of money

Central bank digital currencies are not imminent, but they are coming

In a world of CBDCs, all payments would be electronic. ST PHOTO: GIN TAY

CBDC. Get used to that acronym because you're going to see a lot more of it. CBDC stands for "central bank digital currency". How would it work?

To take a simplified example, let's say the Monetary Authority of Singapore (MAS) issues a CBDC. It allows individuals to hold deposit accounts at the MAS, and everybody does. Then if I need to make a payment to you, I activate the MAS payment app on my phone, fill in the payment details, designating you as the payee. The MAS debits my account after verifying I am the rightful owner and have a sufficient balance. It then credits your account after checking your credentials. Commercial banks or other intermediaries are not involved.

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