Assoc Prof Jamus Jerome Lim (Sengkang): Sir, MAS has already expended significant effort and resources to better understand the nature, function and practical operations surrounding the possibility of a digital currency issued by our central bank. Based on public documents issued by the Economic Policy Group, the conclusion is, to somewhat over simplify that Singapore is ready for a digital Sing dollar. However, there is no, and I quote, “pressing need for its issuance at this time.”
MAS has documented a host of advantages associated with ultimately adopting a digital Sing dollar. But there are several advantages to moving earlier on issuance.
First, doing so could help crowd-out alternatives, volatile digital private currencies, especially low-value meme cryptocurrencies that have been an outlet for speculated access.
Second, a digital Sing dollar will allow for the application of more innovative monetary policy, especially with regard to disinflation. While inflation is the current worry, it is not difficult to conceive with global depopulation, deglobalisation and declining productivity of the possibility of a reversal to a low-inflation environment a few years down the road. It would take a few years to roll out the digital currency, making it available to help mitigate the problem of a zero lower bound on norminal interest rates.
And third, a digital Sing dollar, especially one that is trackable by MAS, will help reduce the incidence of counterfeiting and being used for illicit activities, especially given that the largest denomination bill that MAS still mints, is still relatively large at $1,000. That said, there are some additional practical concerns for which it will be useful for this House to better understand.
First, to what extent has global best practices in payments innovation, such as those study in collaboration between the Federal Reserve Bank of Boston and MIT’s Project Hamilton Digital Currency initiative, been incorporated into the MAS’ own background study? Second, what are the main inhibitions that MAS holds that prevents sooner issuance. And third, if there is no urgent need for issuance, what might be the anticipated timeline for a digital Sing dollar?
2 March 2022
Prime Minister’s Office