The Monetary Authority of Singapore (MAS) announced several financial technology initiatives and collaborations during the seventh edition of the Singapore FinTech Festival, which was held from October 31, 2022 to November 04, 2022. The theme for the 2022 Festival was “Building Resilient Business Models amid Volatility and Change.” Over 110 countries and 2,000 organizations are expected to participate in this festival. During this period, MAS announced several industry collaborations and other initiatives in the field of green finance, cybersecurity, wholesale central bank digital currencies, decentralized finance, and cross-border payments.
MAS and its partner agencies made the following announcements:
- Project Orchid. MAS published a report on potential uses of a purpose-bound digital Singapore Dollar (SGD), which marks the successful completion of phase 1 of Project Orchid. The report introduces the concept of Purpose Bound Money (PBM) and the potential benefits of programmable digital currency through illustrative use cases contributed by industry participants and government agencies. The report discusses the design considerations for implementing PBM and features four case studies based on ongoing trials that have been initiated to support the experiments of PBM and a digital SGD. Some of the use cases will be tested through live trials by the public and the private sector in 2022, and others will be conducted in 2023. Going forward, Project Orchid will engage with a broader set of stakeholders and investigate a greater set of capabilities, including research focused on improving the user experience, strengthening security and privacy capabilities, and increasing accessibility to the broad population.
- MAS announced new initiatives to expand cooperation in green finance and deepen capital market linkages with China. MAS and the People’s Bank of China (PBC) established a China-Singapore Green Finance Taskforce to enhance collaboration in areas such as standards and definitions, green and transition financing solutions, data and technology enablers to catalyze green financing flows, and green investment opportunities in China and the region. As part of another initiative, the Singapore Exchange (SGX) and Shenzhen Stock Exchange (SZSE) plans to welcome the first three participating Exchange Traded Funds (ETFs) under the ETF Product Link and launch a Low Carbon Index Family, that will serve as a benchmark for fund managers to launch new green funds focused on China, ASEAN and other countries in Asia, by end of 2022.
- At its sixth annual meeting, MAS Cyber Security Advisory Panel (CSAP) provided insights on how Singapore’s financial sector can address technology and cyber risks amid heightened geopolitical tensions, rapid digitalization of financial services, and an increasingly hostile cyber threat landscape. The Panel discussed on maintaining agility of responses to cyber threats, adopting a holistic approach in dealing with digital banking scams, mitigating cybersecurity risks related to the increasing use of distributed ledger technology (DLT), emerging risks associated with quantum computing, and managing concentration risks associated with critical third-party service providers.
- MAS and the New York Innovation Center (NYIC) of the Federal Reserve Bank of New York announced Project Cedar Phase II x Ubin+, a joint experiment to investigate how wholesale central bank digital currencies (wCBDCs) could improve the efficiency of cross-border wholesale payments involving multiple currencies. The Project will enhance designs for atomic settlement of cross-border cross-currency transactions, leveraging wCBDCs as a settlement asset, that aims to significantly reduce settlement risk which is a key pain point in cross-border cross-currency transactions. MAS plans to release a detailed report on project experiments and findings in 2023.
- MAS announced that the first industry pilot under Project Guardian that explores potential decentralized finance (DeFi) applications in wholesale funding markets has completed its first live trades. DeFi has enabled financial transactions to be performed by entities directly with one another using smart contracts, without financial intermediaries. The live transactions executed under the first pilot demonstrate that cross currency transactions of tokenized assets can be traded, cleared and settled instantaneously among direct participants. This frees up costs involved in executing trades through clearing and settlement intermediaries, and the management of bilateral counterparty trading relationships as required in today’s over-the-counter (OTC) markets. In addition, MAS is also launching two new industry pilots on trade finance and wealth management.
- MAS announced the launch of Ubin+, an expanded collaboration with international partners to improve the efficiency and reduce the risks of cross-border foreign exchange settlement, by advancing cross-border connectivity and interoperability of wholesale digital currencies. The initiative, Ubin+, focuses on developing technical standards and infrastructure to support cross-border connectivity, studying business models and governance structures for cross-border foreign exchange settlement, and establishing policy guidelines for the connectivity of digital currency infrastructure across borders. As part of Ubin+, MAS is working with international partners on different projects related to foreign exchange and liquidity management (Project Mariana), interoperability between DLT and non-DLT payment systems, and connectivity across heterogenous digital currency networks.
MAS also announced the winners of industry awards and competitions, which include Global FinTech Hackcelerator (theme was accelerating a greener digital future focusing on Web 3.0 and green finance) and the SFF Global FinTech Awards (theme was embracing digital, charting the new normal). The winners, comprising financial institutions, fintech companies and solution providers, were recognized for their innovative solutions that can help to accelerate the pace of digitalization, innovation and sustainability in the financial industry. The Festival was organized by MAS and Elevandi, in partnership with Constellar and in collaboration with The Association of Banks in Singapore. Next year, the Singapore FinTech Festival is expected to take place during November 13, 2023 to November 17, 2023.
Keywords: Asia Pacific, Singapore, Banking, Securities, Fintech, Regtech, Digital Assets, CBDC, Wholesale CBDC, Digital Currencies, Low Carbon Economy, Cyber Risk, Distributed Ledger Technology, Third Party Risk, DeFi, Web 3 0, Sustainable Finance, Singapore Fintech Festival, ESG, MAS
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