HMT and MAS Forge Partnership for Financial Services Cooperation

MAS-HMT Partnership. As part of the key results of this dialog, an industry-led UK-Singapore business roundtable will convene on July 01 to discuss approaches and potential cross-border collaboration in supporting the transition toward low-carbon and scaling voluntary carbon markets. The two countries also signed a memorandum of understanding to enhance bilateral cyber-security cooperation, including the sharing of cyber-related information and supervisory best practices. The following are the other key highlights of the dialog:

• Discussed possible areas for enhanced collaboration, particularly in cross-border financial regulation.
• UK to update Singapore on its new regime for marketing of overseas funds and its review of the Solvency II regime for insurance firms
• Discussed developments related to the global asset management industry, including the global norm of portfolio delegation, and agreed to maintain a dialog on these developments
• Discussed ongoing efforts to tackle climate change and reaffirmed support for mandatory climate-related financial disclosures aligned with the Task Force for the Climate-related Financial Disclosures (TCFD) recommendations
• Both countries to explore collaboration on a biodiversity pilot study, which will inform research into how nature-related risks will affect the financial system and contribute to this area of growing importance
• Recognized the need to conclude a credible and balanced Article 6 package of the Paris Agreement at the COP26, to support the development of carbon markets
• Discussed global developments and the evolving regulatory regime for stablecoins, and agreed to exchange regular updates on their respective regulatory approaches

MAS-BDF Experiment. In another recent development, MAS and the Bank of France (BDF) announced the successful completion of a wholesale cross-border payment and settlement experiment using central bank digital currency (CBDC). The experiment, supported by J.P. Morgan’s Onyx, simulated cross-border transactions involving multiple CBDCs (m-CBDC) on a common network between Singapore and France. This is the first m-CBDC experiment that applied automated market making and liquidity management capabilities to reap cross-border payment and settlement efficiencies. This experiment is also one of the last of BDF’s wholesale experiment programs, which will be achieved by Fall 2021. The experiment simulated cross-border and cross-currency transactions for SGD CBDC and EUR CBDC; it was conducted using a permissioned, privacy-enabled blockchain based on Quorum technology and the following four key outcomes were achieved:

• The demonstration of interoperability across different types of cloud infrastructure. Blockchain nodes were set up across private and public cloud infrastructures in both countries. 
• The design of a common m-CBDC network that enabled the two central banks to have visibility on cross border payments, while retaining independent control over the issuance and distribution of their own CBDC. 
• The setup of an experimental m-CBDC network that incorporated automated liquidity pool and market-making service for EUR/SGD currency pairs. The use of smart contracts automatically managed the EUR/SGD currency exchange rate in line with real-time market transactions and demands. 
• The simulation of an experimental m-CBDC network that showed that the number of correspondent banking parties involved in the payment chain for cross-border transactions can be reduced. Consequently, the number of contractual arrangements, the Know Your Customer (KYC) burden, and the associated costs could be cut down. 

Related Links

• HMT Press Release
• Joint Statement (PDF)

Keywords: Europe, Asia Pacific, UK, Singapore, Banking, Cyber Risk, Carbon Markets, Disclosures, Climate Change Risk, TCFD Recommendations, ESG, Sustainable Finance, Taxonomy, MoU, MAS, HM Treasury