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    MAS Finalizes Notices on Debt Servicing Ratio, Launches ESG Impact Hub

    October 26, 2022

    The Monetary Authority of Singapore (MAS) published notices on the computation of the total debt servicing ratio for property loans and is seeking comments, until December 21, 2022, on the measures for digital payment token services and the regulatory approach for stablecoin-related activities. As part of additional announcements, MAS launched the Environment, Social, Governance (ESG) Impact Hub, established a Sustainable Finance Advisory Panel (SFAP) to help guide MAS on its strategies and initiatives to build a credible and vibrant sustainable finance ecosystem signed a FinTech Co-Operation Agreement with the International Financial Services Centers Authority (IFSCA) to facilitate regulatory collaboration and partnership in FinTech, and held a conference to mobilize capital for net zero transition. The conference featured the launch of a SGD 5million Asia Climate Solutions Design Grant, along with an initiative by the GFANZ Asia-Pacific (APAC) Network to develop guidance for financial institutions on how they can facilitate the managed phase-out of coal power generation in the Asia Pacific.

    MAS published three separate notices on the computation of the total debt servicing ratios for property loans, with applicability for full and wholesale banks, merchant banks, and finance companies. The notices set out the formula and parameters to calculate the total debt servicing ratio, monthly total debt obligations, and gross monthly income of borrowers. The notices took effect on September 20, 2022. Additionally, the consultation paper on regulatory approach for stablecoins sets out the policy regarding the overall regulatory approach on stablecoin-related issuance and intermediation activities and highlights the key requirements that will be imposed on such activities. MAS aims to regulate the issuance of stablecoins that are pegged to a single currency (SCS) where the value of SCS in circulation exceeds SGD 5 million. The key proposed issuer requirements relate to value stability, reference currency, disclosures, and prudential standards. Banks in Singapore will be allowed to issue SCS as well and no additional reserve backing and prudential requirements will apply when the SCS is issued as a tokenized form of bank liabilities given the existing rigorous capital and liquidity frameworks applied to banks. The consultation paper on digital payment token services sets out proposed regulatory measures for licensees and exempt payment service providers that carry on a business of providing a digital payment token service under the Payment Services Act 2019. 

    Among the recent ESG-related announcements the launch of ESG Impact Hub has been the most significant one. The Hub is aimed to spur co-location and collaboration between Environment, Social, Governance (ESG) fintech start-ups and solution providers, financial institutions, and other stakeholders. The Hub will facilitate the discovery, scaling, and deployment of technology solutions to address ESG needs of corporates and financial institutions, notably in terms of accurate measurement, reporting, and verification of climate and sustainability data. The Hub will enable MAS to organize key ESG initiatives, such as ESG FinTech accelerator program, training and capacity-building workshops, and thought leadership events, as well as support ESG stakeholders by deploying these programs and solutions to drive material, quantifiable impact, with emphasis on the eight focus sectors identified by the Green Finance Industry Taskforce (GFIT). The Hub will also anchor industry-driven sustainability initiatives such as the Point Carbon Zero Program and KPMG's ESG Business Foundry. At the time of launch, 15 ESG fintech firms were already set up at the Hub and MAS has disclosed this entity list with this announcement.

     

     

    Keywords: Asia Pacific, Singapore, Banking, Fintech, Regtech, Stablecoins, Digital Assets, Disclosures, ESG, ESG Impact Hub, Climate Change Risk, Sustainable Finance, Net Zero Transition, Regulatory Sandbox, CRE, Debt Servicing Ratio, Lending, Credit Risk, Basel, MAS

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