PBM, Singapore Government's Web3 Attempt

The Monetary Authority of Singapore (MAS) released the 'Purpose Bound Money Technical Whitepaper' in June 2023. It is the first guidance document relating to digital currency since MAS publicly released the consultation document on digital asset supervision and Stablecoins development to the industry last October. The whitepaper is a result of Project Orchid, a collaborative initiative between MAS and industry partners aimed at building infrastructure and blueprints for future digital asset platforms. Regarding the list of partners, it generally includes central banks, large commercial banks, financial institutions, and large enterprises, and is not covered by original Web3 enterprises and institutions. Even so, this whitepaper is also a reference for observing the actual implementation and development direction of digital currencies by government regulatory agencies and traditional financial institutions. It is precisely for this reason that it may play an important role in the direction of future development for everPay, and even become an effective way for Web3 to be accepted by traditional business environments.

What is PBM?

National financial regulatory agencies such as MAS have recognised their positive roles in promoting more effective transactions, enhancing financial inclusivity, and unleashing economic value through years of observation of the development of digital currency. However, they also reserved their own views on the overly touted programmability of digital currency.

In MAS's view, money is the intermediary for value storage and exchange. Traditional paper money, CBDC, tokenised bank debt, and well supervised Stablecoin should be included in this category. Therefore, programmability cannot be achieved at the cost of sacrificing the ability of digital currency as a medium of exchange, and the singularity of currency should be maintained.

Therefore, MAS defines PBM as digital funds for specifically used purposes in the white paper, without the need to program the funds themselves. Its launch aims to prevent digital currencies from sacrificing the attributes of the currency itself due to excessive programming.

The difference among the three modes

In order to better distinguish the differences among PBM and other programmable modes, the white paper provides further comparative explanations.

MAS divides programmable patterns into three types: programmable payments, programmable currencies, and purpose constrained funds.

Mode 1: Programmable Payments

It refers to the automatic implementation of payment once a predetermined set of conditions are met. Direct debit and long-term orders are two examples. Programmable payment is usually realised by setting database triggers or an API gateway between the accounting Ledger and the application client. These programming interfaces interact with traditional Ledger and adjust bank account balances according to programming logic. Its advantage is the ability to define a set of programming logic or conditions that can be applied to various forms of currency. In fact, its programming logic is decoupled from the value of storage, and there is no relationship between them.

Mode 2: Programmable Currency

It refers to embedding corresponding rules in the value storage itself to define or limit its potential use. For example, the storage value can be sent to whitelisted users. Unlike programmable payments, it embeds programming logic into storage value, and when the currency is transferred to others, the programming logic is also transferred simultaneously, which is also one of the advantages of this model.

Mode 3: Purposes Constrained Funds PBM

PBM is built on the concepts and capabilities of programmable payments and programmable currencies. It is a protocol that specifies the conditions of using the underlying digital currencies. It's like a "safe" that locks in a universally used currency. Only by meeting the conditions set by the "safe" can the currency inside be released. As it should be, this "safe" itself can also be freely traded and transferred without intermediaries.

Give an example of a "voucher" based on the PBM protocol. It comes with a pre-defined set of usage conditions, where the holder can show a "voucher" to participating merchants in exchange for goods or services. Therefore, consumers can purchase a "voucher" based on the PBM protocol and forward it to another person, who can use it among participating merchants. However, unlike regular vouchers, it limits the use of payers , but there are no restrictions on the payees. When consumers use "vouchers" for payment, if the terms of use are met, the universal digital currency will be released from PBM and transferred to the merchants. Afterwards, merchants can use digital currency for other purposes without any restrictions, such as making payments to suppliers.

How is PBM realised?

The design of PBM consists of two parts, as shown in the following figure:

PBM Wrapper is a set of smart contracts designed to encapsulate digital currencies for specific purposes. By programming this wrapper, it is possible to pre set restrictions on the use of digital currency.

Digital Money is a real value storage medium wrapped by PBM wrapper. Digital money is generally understood as CBDC, Token based bank debt, and well regulated Stablecoin accepted by traditional regulators and financial institutions. They have purer value attributes with no more programming functions, and only reflect the value of digital money itself.

In the process of usage, there are three roles:

  • PBM creator, this role is responsible for defining the inner logic of PBM, as well as the casting and distribution of PBM tokens.

    The PBM lifecycle begins in the release phase. The creator is the main role in creating PBM smart contracts and minting PBM tokens. After the creation of PBM, the ownership of digital currency is transferred to the PBM smart contract, which is constrained and managed by the specified conditions in the PBM smart contract, and will only be released after all the conditions are met.

    After the PBM token is minted, it is distributed by the PBM creator to the expected entities (i.e. PBM holders) for use. PBM holders receive PBM tokens and can only exchange them according to the original conditions set by the PBM creator.

  • PBM holder, this character holds one or more PBM tokens and can redeem unexpired PBM tokens.

    PBM tokens can be transferred from one entity to another in their encapsulated form according to their programming rules. The transition phase is optional, depending on the used case. PBM tokens, such as government grants, cannot be transferred to citizens outside of specific student groups. In commercial vouchers (such as retail vouchers), however, PBM tokens can be transferred to any other consumer.

  • PBM Redeemer: This character is allowed to redeem PBM tokens and receive unlocked basic digital currency.

    The redemption phase bagins when all the conditions specified for PBM tokens are met. At this moment, the PBM token is unlocked and ownership of the underlying digital currency token is transferred to the receiving entity. Entities can freely use digital currency tokens without any PBM smart contract restrictions.

For example, in order to stimulate consumption, the government issued a batch of PBM tokens with a valid period of six months and a face value of 100 U through fiscal subsidies. Consumers who grab PBM can consume and use PBM for deduction on government designated cooperative e-commerce platforms during the six-month valid period, or freely transfer PBM tokens to other consumers. Only merchants in cooperative e-commerce platforms can perform redemption operations and unlock 100U of digital currency in PBM tokens into the merchant's electronic wallet after obtaining PBM tokens. If the six-month valid period expires, these PBM tokens will be automatically unlocked, and 100U of them will be returned to the government's electronic wallet account.

We can clearly witness several characters.

  • PBM Creator: Government

  • PBM holder: consumer

  • PBM redeemer: Merchants in cooperative platforms

In the example above, unlike traditional practices, the government only needs to issue PBM tokens. The consumption voucher PBM tokens use smart contracts to set usage terms, scenarios and roles, and the entire process is automatically completed based on point-to-point. In traditional practice, the government has to issue Voucher through some platforms, and these Vouchers cannot be used on other platforms and can not freely transferred by consumers, which is inefficient and inconvenient.


As the first application of Web3 technology by the Singapore Government, PBM clearly holds a special position and mission. Unlike the behavioral approach aimed at technological revolutionary innovation in the Web3 ecosystem, the design of PBM starts from the perspectives of regulators and traditional financial institutions, searching for application scenarios that best fit the current social needs, and considering how to apply concepts such as blockchain technology, digital currency, and encrypted consensus in the most effective way to improve social efficiency and unleash economic value. This may be the beginning of the integration of Web3 and Web2, providing a valuable reference direction for Web3 financial infrastructure like everPay.

This article gives a brief overview of PBM tokens in advance. In the future, we will further discuss the potential application scenarios of this model, such as prepayments, e-commerce, contract agreements, commercial leasing, trade financing, donations, and cross-border remittances mentioned in the white paper.


  1. https://www.mas.gov.sg/publications/monographs-or-information-paper/2023/purpose-bound-money-whitepaper

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Translator: XiongHa @ Contributor of PermaDAO

Reviewer: Bananaa @ Contributor of PermaDAO

Tagged with In Arweave news PermaDAO PBM

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