At the Singapore FinTech Festival 2024, newly promoted Managing Director at the Monetary Authority of Singapore (MAS), Mr. Chia Der Jiun, reflects on the policy strategies that will guide his leadership and key priorities for the MAS on the direction of fintech, from payment systems and tokenization, AI, through to sustainable finance. His conversation with BBC World presenter Manisha Tank clarifies how the MAS is positioning itself at the forefront of financial innovation. This strategic approach that it plans to take.
Community, Collaboration, and Capability in the Vision
Chia began by emphasizing three pillars that shape MAS’s strategy for the FinTech sector in Singapore: community, collaboration, and capability. He highlighted that the FinTech Festival itself is a very vibrant example of the growing FinTech community in Singapore. He pointed to the broad participation from both startups and established firms. It is this growing ecosystem which is supported by initiatives such as the Global Financial Technology Network or GFTN, where it seeks to foster international FinTech connections and to share resources across borders.
Cooperation features centrally in MAS’s approach, graduating from initial experimentation toward scalable solutions. MAS has implemented consortium-driven strategies that pool industry players and policymakers to tackle challenges, especially in areas such as digital assets and AI. This new perception is reflected in MAS’s Project Guardian, which partners with industry leaders to unlock the potential of digital assets, and Project MindForge, addressing the specific challenges and governance needs that Generative AI presents.
Payment Systems: Borderless
On the payment front, Chia noted that Singapore’s digital payment infrastructure is very strong, with very high levels of domestic adoption of digital IDs, QR codes, and the PayNow system. Still, he admitted there were ample challenges, especially in achieving interoperability amongst different payment schemes. NETS Group and Liquid Group are developing an interoperable QR payment solution-the aim is to simplify merchant onboarding and to provide universal customer access, regardless of which specific payment platform one uses.
Great progress has been made by MAS in the area of cross-border payments but at considerable labor intensity. Chia explained how MAS has attempted to build bilateral payment linkages with Thailand, Malaysia, and India, but each one individually proves to be labor-intensive. To rectify this, the ASEAN nations are working with the BIS on Project Nexus-a centralised system that will facilitate cross-border payments among a myriad of nations. Singapore has been named the headquarters for the Nexus Scheme Organisation; testament to the country’s intent in transforming international payment landscapes.
Tokenisation: Connecting Assets and Innovation
On tokenization, Chia said that tokenised assets hold economic promise for being able to enable faster financial transactions at a reduced cost. The Project Guardian saw MAS run pilots in tokenisation across asset classes with financial institutions-including fixed income, foreign exchange, and funds. It helps illustrate cost and speed gains from this project. One area this has to improve is scalability, but MAS developed this multi-layered framework. This framework will consist of standardization of asset representation at the “token layer,” settlement options in a secure manner at the “settlement layer,” and infrastructure that will be compliance compatible with requirements at the “chain layer.”.
MAS is further building a stablecoin regulatory framework to also ensure that such digital assets used for settlements are sound. It, in turn, allows issuers to adhere to regulatory benchmarks, stability, and trust in the ecosystem. Chia indicated that MAS worked with the Global Layer One consortium to meet the industry’s need for interoperability as well as regulatory compatibility to ensure that “tokenized assets can be secure and usable at scale.”.
Generative AI: Charting through the Complex Terrain
As Chia reminded us, this was where generative AI moved at breakneck speed with both opportunity and risk, and MAS’s cautious but supportive stance has been one of gradual engagement with this technology. Rather than seeking immediate regulation, MAS has approached this issue through a collaborative effort as part of Project MindForge-an industry consortium created to study the risks related to AI. This consortium is aimed at developing common taxonomy for understanding risks associated with data governance, model development, and AI deployment in the financial sector. As the project progresses, MAS will provide governance guidance that addresses the very pertinent risks of Generative AI such as data leakage attacks, prompt injection attacks amongst others while promoting the responsible adoption of AI in the industry.
Sustainable Finance: Building Resilience for a Changing Climate
Sustainable finance is now an integral part of addressing risks on the climate globally. I illustrate this with the example of Chia, speaking based on his background with Singapore’s sustainability ministry, pointing to the MAS’s proactive measures in this regard. He went further to identify further positive trends in sustainable investment and lending by further elaborating how MAS has undertaken regulatory support for carbon disclosures and encouraged financial institutions to integrate sustainability into their operations. Chia stresses that continuous skill development is a requirement in sustainable finance, something MAS is supporting through the identification of necessary competencies and the promotion of targeted training initiatives.
Another challenge he also mentioned was obtaining actual data to derive the impact that different activities have on the environment, especially for small enterprises. To this end, MAS and GFTN came up with what is called Gprnt – a platform that will not only help companies in easy acquisition and reporting of environmental data but also ease the process by having one platform for reporting.
This is a stride in the right direction for greater transparency, but Chia mentioned that the industry needs to step up in completing the data gaps.
Quantum Computing and Future Innovation
Finally, in closing, Chia touched briefly on quantum computing. Though quantum computing is still not yet commercially viable, it promises to be of great use in the potential revolutionizing of data security and computation. Recognizing this need for preparation on future security implications of quantum technology, MAS has been looking into post-quantum encryption and quantum key distribution in safeguarding itself against such future threats. Even if practical applications are only now coming into view, MAS’s proactive stance toward this frontier technology is an evidence of a forward-looking attitude.
A Future Built on Learning and Adaptability
Reflecting on his experience at the festival, Chia said he was eager to know more about the latest innovations and remain capable of adapting to what is constantly changing in the FinTech landscape. That attitude speaks well for MAS in an effort to encourage a culture of learning new ideas and confrontation with the hard problems often arising with innovation. Based on community, collaboration, and capability, Singapore will continue to stand at the cutting edge of financial technology as ever resilient to change and always proactive in pursuit of sustainable growth. In a nutshell, this discussion by Chia underlined how MAS achieves a balanced score between regulatory foresight and industry engagement which sets the stage for an exciting future where Singapore would remain the global hub of FinTech.
