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Singapore FinTech Festival kicks off in November

Singapore FinTech Festival, the largest FinTech Festival in the world and a knowledge platform for the global FinTech community, kicked off its largest in-person show post Covid in Singapore in Nov. 2-4, 2022.

Organized by the monetary authority of Singapore in partnership with the Association of Banks in Singapore and SingEx Holdings, the 7th annual event attracted over 62,000 participants from more than 115 countries, with 570 exhibitor booths and delegates from 25 countries. More than 60 industry announcements were made during SFF 2022, from product launches and public and private collaborations to joint research efforts.

Conference highlights

Ravi Menon, managing director of Monetary Authority of Singapore (MAS), kicked off Day 2 at SFF with his keynote, “Fintech in its elements.”

Summarizing FinTech’s top 5 elements of FinTech as water, metal, fire, wood, and earth, Menon explained how each element can contribute to 5 desirable outcomes in FinTech collaborations, as follows:

Flowing like water: Instant Remittances

Singapore launched “pay now” years ago, a service used by as many as 60 countries. Designed to make domestic payment flow as seamlessly as water, pay now sends real-time transfers 24/7, using mobile numbers or unique identity numbers. Singapore has been connecting its pay now network with faster payment systems around the world; approximately 190 links will be needed to enable 20 countries to be interlinked on a bilateral basis. Toward this end, MAS has been working with the Bank for International Settlements, Innovation Hub, and Project Nexus to create a global, multilateral real-time payment system. With this solution, each country will only need to link its real-time payment system to a Nexus gateway, which in turn will provide direct connectivity to all the other countries on the network. Project Nexus aims to address the challenges of speed, cost, access, and transparency.

Strong like metal: Atomic Settlement

Real-time payments don’t solve the settlement problem because bank-to-bank money movement is not instantaneous. A real-time settlement system that is strong and secure like a metal is needed. One of the promising ways to achieve this is through tokenized assets, which can be exchanged simultaneously on a distributed ledger. MAS has been experimenting with Project Ubin since 2017, which presents the following three possible outcomes:

1. First, banks pay one another without going through MAS.
2. Second, decentralized matching of payments while preserving transactions privacies.
3. Third, final settlement, delivery, and payments by tokenizing digital currencies and securities assets so that they could be exchanged simultaneously.

Project Ubin also paved the way for a joint venture among DBS bank, JP Morgan and Temasek, using a blockchain-based multi-currency clearing and settlement platform to reduce settlement time from Singapore dollar and US dollar transactions from days to just minutes. Project Dunbar, a partnership among BIS stakeholders Reserve Bank of Australia; Bank Negara, Malaysia; South African Reserve Bank, and the NHS, to build open-source distributed ledger platforms for international settlements using wholesale Central Bank Digital Currencies (CBDC).

Now MAS is launching project Ubin+, a global initiative on the cross-border exchange and settlement of foreign currency transactions using wholesale CBDC. Through project Ubin+, MAS, the Central Banks of France and Switzerland and the BIS innovation hub will explore automating the exchange and settlement of wholesale CBDC via an automated market maker, enabling exchange and settlement of more digital assets. MAS is also partnering with Swift to explore various interoperability models that enable instant cross-border payment and settlement across DLT systems and existing payments infrastructure.

Reshaping like fire, Programmable Money

Money today exists in two forms, physical cash in the form of central bank issued notes and coins and digital money in the form of deposits with commercial banks. Digital money has accounted for 92 percent of money supply in Singapore. The issue of money today is not programable, due to embedded rules within each medium of exchange that defines its usage. By contrast, programmable money can be provisioned for specific intended purposes like donations, etc., using cryptocurrencies, stable coins, tokenized, bank deposits, and central bank digital currencies (CBDCs).

Just as the heat of the fire reshapes objects into new forms, MAS wants to reshape money through experiments with tokenized deposits and CBDCs. The platform to experiment with programmable money is called Project Orchid, which enables senders to program conditions into digital Singapore dollars that dictates how recipients can use the money. Project Orchid has released a paper to further identify 4 areas for application of programmable or Purpose Bound Money (PBM) in Singapore.

Growing like wood, Tokenized Assets

Tokenization involves using software programs to represent ownership rights over any item of value as a digital token or assets. Asset tokenization has transformed and eased lots of potentials because first it allows high-value financial and real economy assets to be fractionalized and exchanged over the internet on a peer-to-peer basis to trade securely and seamlessly without the need for intermediaries. Third asset tokenization enables decentralized finance, where borrowing lending and trading activities can be performed autonomously through smart contracts, potentially enhancing the efficiency and accessibility of financial services.

Project Guardian aims to create the necessary structure and protocols to optimize benefits of tokenized assets while mitigating risk across three areas:

1. First, building interoperable networks that enable digital assets to be bought and sold across multiple trading venues.

2. Second, to use trust financial institutions to verify and issue credentials for those to participate in this network.

3. Third, to create a common pool of digital assets that can be exchanged directly without intermediaries.

A pilot test, conducted by DBS bank, JP Morgan and SBI Digital Assets Holdings, highlighted approaches to reducing risks in executing trades and transacting in tokenized foreign exchange and government bonds.

MAS believes Project Guardian can pave the way for the next evolution of financial markets in Singapore and encourages everyone to participate this journey to submit the proposal to MAS fintech regulatory sandbox.

Grounded like earth, Trusted Sustainability Data

Trusting sustainable data is the foundation to transitioning to a greener financial agenda. Just as Earth provides a firm, steady ground to stand upon, we need green FinTech. Quality data is an essential requirement to fight greenwashing and enable stakeholders to make well informed ESG investment decisions. FinTech can be a key enabler in addressing these data challenges.

MAS has launched collaborative effort with the financial industry called Project Greenprint. Project Greenprint seeks to build digital utilities that streamline collection, access and use of climate and sustainability data.

Tracy Lai

MPC Strategist, FinTech Consultant Partner at LYSTAR GROUP (Insert hyperlink of website: Tracy Lai provides strategic and business development solutions to executives, and entrepreneur. Her professional experience includes work at Fortune 500 companies including Intel and RBS, and startups. Her expertise covers business development, risk management, project management and investor relations, in Financial Services, FinTech, Innovation, Technology and Education. As management consultant and FinTech advisor, she holds multiple senior roles with focus on cross border and cross industry collaboration, including projects in US, Asia and Europe.