{"id":12669,"date":"2024-11-11T09:30:00","date_gmt":"2024-11-11T01:30:00","guid":{"rendered":"https:\/\/dollarsandsense.sg\/business\/?p=12669"},"modified":"2024-11-11T10:00:43","modified_gmt":"2024-11-11T02:00:43","slug":"understanding-purpose-bound-money-and-how-it-could-evolve-singapores-business-world","status":"publish","type":"post","link":"https:\/\/dollarsandsense.sg\/business\/understanding-purpose-bound-money-and-how-it-could-evolve-singapores-business-world\/","title":{"rendered":"Understanding Purpose Bound Money, And How It Could Evolve Singapore\u2019s Business World"},"content":{"rendered":"\n

Is a dollar always worth a dollar?<\/p>\n\n\n\n

This question often surprises my audience whenever we discuss the true value of money. My answer, however, is almost always no.<\/p>\n\n\n\n

How much a dollar\u2019s worth isn\u2019t as straightforward as it seems\u2014it can be more valuable in some contexts and less so in others. While it\u2019s tempting to think of money as universally interchangeable, the reality is that how, when, what and where a dollar is spent can significantly influence its value.<\/p>\n\n\n\n

For example, if you spent a dollar 100 years ago, it will almost certainly be worth more than a dollar today. Similarly, if you spend a dollar 100 years later, it will almost certainly be worth less. That is the time value money of concept at work.<\/p>\n\n\n\n

Understanding Purpose Bound Money<\/h3>\n\n\n\n

Another money concept that could become relevant in our world is Purpose Bound Money (PBM). PBM is a type of digital currency that comes with built-in restrictions specifying how, where, or on what it can be spent.<\/p>\n\n\n\n

The CDC vouchers<\/a> we receive each year can be seen as a form of PBM. They can only be used at designated local businesses, hawker stalls, and participating merchants, creating a clear boundary around where and how the money is spent. This ensures that the vouchers fulfill a core purpose: to boost neighbourhood businesses and support small, often family-owned businesses.<\/p>\n\n\n\n

During the Singapore FinTech Festival, which DollarsAndSense was covering as a supporting media partner, I attended a session titled\u00a0“Achieving transparency and speed in transactions with purpose-bound money<\/em>\u00a0on the technology stage.”<\/strong><\/span><\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Photo taken during 2024 Singapore FinTech Festival<\/em><\/p>\n\n\n\n

This was a discussion on a recent announcement where OCBC and LTA announced that they will be piloting a blockchain-based conditional payments solution with its business banking platform. This solution aims to enable LTA to make payments to its main contractors more efficiently and with greater transparency.<\/p>\n\n\n\n

How Blockchain-Based Conditional Payment Works For Construction Project<\/h3>\n\n\n\n

This new blockchain-based payment solution allows LTA to streamline how it distributes Purpose Bound Money (PBM) in the form of advance payments for construction projects, enhancing oversight and transparency. These advance payments, often in the millions due to the large scale of these projects, help contractors cover significant upfront costs and are typically a percentage of the total project value.<\/p>\n\n\n\n

OCBC\u2019s blockchain-based conditional payments system automatically sends these Purpose Bound Money disbursements to the contractor once the smart contracts confirm that specific conditions are met. This setup gives LTA full visibility into how the PBM is used, while integration with OCBC\u2019s business banking platform allows a real-time view of transactions and balances.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Photo taken during 2024 Singapore FinTech Festival<\/em><\/p>\n\n\n\n

The pilot program includes three main contractors working on the Cross Island Line projects. To date, over S$22 million in PBM has been disbursed to the main contractors and their subcontractors using this blockchain-enabled solution.<\/p>\n\n\n\n

How Can Singapore Businesses Benefit From PBM?<\/h2>\n\n\n\n

With PBM, businesses can ensure that funds are allocated and used for their intended purposes, such as covering project costs or paying approved vendors. This reduces risks of fund misuse and simplifies financial management. The automatic release of payments through blockchain smart contracts also speeds up cash flow, helping businesses manage expenses more easily.<\/p>\n\n\n\n

Moving forward, we expect more businesses to use PBM to help build trust and streamline transactions, especially in complex projects that involve multiple parties across different industries and geography.<\/p>\n\n\n\n

Did you miss out on attending the Singapore FinTech Festival 2024? You can catch our coverage here.<\/strong><\/p>\n\n\n\n

Read Also: <\/em><\/strong>GFTN: How Singapore\u2019s Global FinTech Ambitions Rest On The Shoulders Of This Newly-Minted Business<\/em><\/strong><\/a><\/em><\/strong><\/p>\n\n\n\n

Read Also: <\/em><\/strong>4 Trends We Learned At The Singapore FinTech Festival (SFF) 2024 <\/em><\/strong><\/a><\/em><\/strong><\/p>\n\n\n\n

Read Also: <\/em><\/strong>I\u2019ve Attended The Singapore FinTech Festival (SFF) In The Past 2 Years, Here\u2019s What Finance Professionals Can Expect At This Stand-Out Event<\/em><\/strong><\/a><\/em><\/strong><\/p>\n\n\n\n

Read Also: <\/em><\/strong>Personal Finance Insights From The Singapore FinTech Festival: How To Navigate Your Finances And Careers<\/em><\/strong><\/a><\/em><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"Is a dollar always worth a dollar? 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