SFF2023: Shaping the Financial Ecosystem of the Future – MAS MD

At the Singapore FinTech Festival 2023, Mr Ravi Menon, Managing Director, Monetary Authority of Singapore (MAS), outlined an “audacious” goal – “to collaborate with the financial industry and international partners to shape the financial ecosystem of the future”.

He highlighted the three key outcomes to collectively achieve as part of this emerging financial ecosystem.

• Instant Payments – make cross-border payments cheaper, faster, and more efficient.
• Seamless Financial Transactions – enable financial assets to be transacted seamlessly across multiple trading venues through digital assets, digital money, and interoperable digital networks.
• Trusted Sustainability Ecosystem – foster a trusted data and disclosure ecosystem to support sustainable finance for the world’s transition to net-zero.

Here’s an overview of what he shared.

Instant Payments

Singapore’s e-payments journey has taken us from domestic transfers to bilateral linkages to multilateral networks.

Mr Menon shared the success of Singapore’s FAST and PayNow systems, which have made electronic transfers ubiquitous and cost-free, boosting e-commerce and various online services. The integration of multiple QR codes into a single SGQR label marked a global first, simplifying mobile payments and achieving widespread merchant acceptance. Singapore has led the way in bilateral instant payment linkages with neighboring countries such as Thailand, India, and, soon, Malaysia, and is expanding QR payment linkages with its Asian neighbours – China, Malaysia, Thailand, and, soon, Indonesia – so travellers between Singapore and these countries experience seamless transactions.

Everything we do in FinTech must have a larger purpose.

Mr Ravi Menon, MD, MAS

He also gave an update on Project Nexus – a multilateral solution to link multiple national real-time payment systems – which MAS had been working with the Bank for International Settlements (BIS) Innovation Hub. The BIS Innovation Hub has published a technical proof of concept for connecting the payment systems of the Eurosystem, Malaysia, and Singapore, and the MAS has partnered the central banks of Indonesia, Malaysia, Philippines, and Thailand and the BIS Innovation Hub to develop the core foundational work for a multilateral instant payment linkage across the five ASEAN countries.

Seamless Financial Transactions

He emphasised the need for a cohesive network that allows for instantaneous and seamless clearing and settlement of transactions. This vision hinges on digital assets, digital money, and digital infrastructure. He outlined the transformative potential of tokenization, which facilitates direct exchange and fractionalization of assets, leading to atomic settlement and broadened investor access.

Digital assets are being tokenized across various classes, from foreign exchange to bonds and funds, through initiatives like Project Guardian. This is fostering a 24/7 global liquidity pool, enabling seamless cross-border transactions and enhancing the efficiency of capital markets.

Digital money contenders, such as privately issued cryptocurrencies, central bank digital currencies (CBDCs), tokenized bank liabilities, and stablecoins, were assessed. Cryptocurrencies were deemed inadequate as a medium of exchange or store of value due to their speculative volatility. Wholesale CBDCs and tokenised bank liabilities can play the role of digital money and help to achieve atomic settlement. MAS will pilot the “live” issuance of wholesale CBDCs to instantaneously settle payments across commercial banks. Stablecoins – if well regulated – can potentially play a useful role as digital money alongside CBDCs and tokenised bank liabilities. MAS has granted in-principle approval under the Payment Services Act to three entities, who will issue stablecoins that substantively comply with MAS’ upcoming stablecoin regulatory framework.

Trusted Sustainability Ecosystem

Mr Menon revisited Project Greenprint, an initiative to develop a trusted ESG data ecosystem, which he spoke about last year. The project has now moved into the next phase with the launch of a new Greenprint integrated platform – Gprnt.ai, a platform driven by Greenprint Technologies, which aims to unify existing pilots and enhance Singapore’s sustainability reporting capabilities. This platform simplifies ESG reporting, especially for SMEs, by leveraging digital systems, government data, and AI tools, including a GPT-4-powered chatbot.

Greenprint’s vision extends beyond Singapore, aiming to partner internationally to support climate risk management and net-zero transition efforts. The platform, set to go live in February, is a step toward creating systems that ensure high-quality data to support global sustainability goals.

The Need for a Larger Purpose

Menon concluded by underscoring the larger purpose of FinTech—not just as a means to financial gains but as a tool for solving real-world issues, enhancing lives, fostering inclusivity, and securing a sustainable future. This ethos has been the cornerstone of the FinTech Festival since its inception, driving the community to build a better world.

The Singapore FinTech Festival 2023 is organised by the Monetary Authority of Singapore, Elevandi, and Constellar, in partnership with The Association of Banks in Singapore.

For more info, visit www.fintechfestival.sg.

Main picture credit: Singapore FinTech Festival