The Digital Economy Semi-Fungible Token (DESFT) Project between Ghana and Singapore is intended to encourage trade between MSMEs in these two countries.

The Bank of Ghana (BOG) and the Monetary Authority of Singapore (MAS) have completed a proof-of-concept for the joint Digital Economy Semi-Fungible Token (DESFT) Project, carrying out live transactions between the sides.

DESFT leverages the Universal Trusted Credentials semi-fungible token protocol developed by the United Nations Development Program, explained Singapore-based Ample FinTech, which identifies itself as the developer of the joint project. Ample FinTech also said the token protocol operates on the ERC-3525 standard on top of the Ethereum blockchain.

The transactions within the proof-of-concept took place within a Purpose Bound Money protocol on a distributed ledger. The parties used two types of tokens: a stablecoin pegged to the Singapore dollar (XSGD) and the BOG’s e-cedi central bank digital currency (CBDC).

The Purpose Bound Money protocol was developed by MAS together with the International Monetary Fund and the central banks of Italy and South Korea. It incorporates programmable money and payment technology and has previously been tested by Amazon and other global retailers.

DESFTs combine NFTs and traditional blockchain information. Its creators believe such tokens have the potential to revolutionise financing, capital markets access and mutual digital trust for Micro, Small, and Medium Enterprises (MSMEs).

Some of the potential use cases include tokenising self-ownership through the DESFT, raising funds from a wider pool of investors by enabling fractional ownership, embedding business and trusted credentials of an MSME into DESFT, smart contracts and digital assets built above DESFT, etc.

Bank of Ghana director of fintech and innovation Kwame Oppong stated that, upon completing proof-of-concept, the project would now focus on supply chain finance and payments across multiple digital currencies.

MAS continuously explores various CBDC use cases with financial players from different countries. At the end of 2023, for example, MAS announced that travellers from China and Singapore will be now allowed to use e-CNY, China’s Central Bank Digital Currency (CBDC), for tourism spending in both countries during their overseas travel.