Written by Jael Tan, Head of Government & International Relations, Elevandi 

Elevandi recaps the news and announcements central bankers and financial regulatory leaders need to know from Q4 2023.

Singapore FinTech Festival 2023

The annual Singapore FinTech Festival concluded its eighth edition on 17 November 2023, drawing a record number of 66,000 participants, with an extended global reach of participants hailing from 150 countries and a speaker line-up of over 970. The official press release by the Monetary Authority of Singapore (MAS), Elevandi and Constellar recaps the highlights here.  

In case you missed it: SFF 2023 Announcements

Artificial Intelligence

Download key stats on the Outlook of AI prepared by Elevandi

AI frameworks and use cases

• NovA!, launched in 2021 under Singapore's National AI Programme in Finance, is dedicated to providing AI-driven sustainability insights for the financial services sector. The NovA! Consortium published a whitepaper documenting the methodology for a Minimum Viable Product for banks to tap on AI when issuing Sustainability-Linked Loans.
  

What you need to know

• Singapore unveiled an updated National AI Strategy (NAIS 2.0) last December. Launched at the Singapore Conference for AI by Deputy Prime Minister and MInister for Finance Lawrence Wong, the strategy outlines 15 actions that Singapore will undertake across 3 systems and 10 enablers, to support their ambitions in AI over the next three to five years.
• A spotlight on Europe: EU policymakers delivered the landmark AI Act in early December marking the world’s most comprehensive legislation for trustworthy AI. The private sector has also responded with Europe’s answer to OpenAI, with noteworthy startups that have emerged, including France’s Mistral, backed by Andreessen Horowitz, Nvidia and Salesforce and Germany’s Aleph Alpha, backed by Bosch, SAP and Hewlett Packard Enterprise.

Blueprint for the future of finance: Digital Infrastructure, Digital Assets and Digital Money

Download key stats on the Outlook of Digital Assets prepared by Elevandi

Digital infrastructure initiatives to scale tokenised markets 

• A new Global Layer One (GL1), an open, digital infrastructure that will host tokenised financial assets and applications will be designed in collaboration with MAS and international policymakers and FIs. The GL1 will facilitate seamless cross-border transactions and enable tokenised assets to be traded across global liquidity pools, while meeting relevant regulatory requirements and guidelines.
• MAS has also released a whitepaper on Interlinking Networks, jointly developed in collaboration with the Financial Industry, FinTechs and Industry Groups. It proposes a common model for linking digital asset networks implemented on diverse ledger technologies and describes common archetypes for the issuance, distribution and transfer of digital assets and introduces a reference model for cross-network exchanges.
• Other updates to Project Guardian include the International Monetary Fund (IMF) joining the Policymakers Group comprising policymakers from Japan, Singapore, Switzerland and the UK. Project Guardian’s Industry Group, currently comprising of 17 FIs, has initiated five additional industry pilots to test promising asset tokenisation use cases. A new funds workstream was also launched within the Project Guardian industry group focused on the native issuance of Variable Capital Company (VCC) funds on digital asset networks.

Digital Assets

IOSCO published new guidance for DeFi which finalised IOSCO’s policy recommendations to address market integrity and investor protection issues. In line with IOSCO’s established approach for securities regulation, the policy recommendations for DeFi are addressed to relevant authorities and look to support jurisdictions seeking to establish compliant markets in the most effective way possible. 

IOSCO has separately published recommendations related to Crypto and Digital Asset Markets more generally outlining 18 policy recommendations. These recommendations are central to the delivery of a coordinated global regulatory response to the significant investor protection and market integrity risks posed by centralised cryptoasset intermediaries.

Download key stats on the Outlook of Digital Assets prepared by Elevandi

Digital Money

MAS unveiled three initiatives to ensure the safe and innovative use of digital money in Singapore: the Orchid Blueprint outlining the infrastructure required for a digital Singapore dollar; expanding digital money trials to tokenised bank liabilities, wallet interoperability, supplier financing and institutional payment controls; and announcement of the first “live” wholesale CBDC to settle retail payments between commercial banks.

Catch-up on related speeches you missed:

• Keynote Address by Kristalina Georgieva, Managing Director of the International Monetary Fund (official video and transcript here) which updates on the digital money voyage 5 years on from her predecessor, Christine Lagarde.
• Speech by François Villeroy de Galhau, Governor of the Banque de France on the central bank’s developments in wholesale CBDC, retail CBDC and cross-border payments.
• Shaping the Financial Ecosystem of the Future - Read the last annual keynote speech at SFF2023 by Mr Ravi Menon, Managing Director, MAS
  

What you need to know:

• Stablecoins issuers Paxos and StraitsX were awarded an in-principle approval by MAS to offer digital payment token services.
• The Hong Kong Monetary Authority (HKMA) on Dec 27 issued a consultation paper outlining a stricter stablecoin regulation regime. Jointly issued with the Hong Kong Financial Services and Treasury Bureau, the changes in regulatory regime was said to be enacted in light of the risks posed by stablecoins based on existing currencies.

Digital Inclusion and SME Empowerment

Universal Trusted Credentials (UTC) was introduced by the United Nations Development Programme, MAS and central banks in Asia and Africa introduced as a solution to the persistent challenge of affordable finance for micro, small, and medium-sized enterprises (MSMEs). Recognised internationally, UTCs aim to facilitate faster, broader, and more cost-effective financial services for underserved MSMEs, making digital transformation more accessible. This published report details the transformative potential, framework, use cases, coordination structures, recommended policies, and modes of engagement for UTCs, signalling a groundbreaking effort to revolutionise MSME access to finance globally.

Collaborations to drive impact for SMEs and MSMEs:

• MAS, Bank of Ghana and Solv Foundation unveils Project DESFT: A blockchain-based digital credential solution for financial inclusion enhancing global trade access for developing nations' MSMEs, with unique features like 'Controllable Transparency' and alignment with UTC standards.
• The International Finance Corporation, MAS, and World Economic Forum have joined forces, signing an MOU to enhance digital inclusion in financial services, targeting reduced inequalities in emerging economies. Their collaborative efforts aim to increase accessibility and affordability of digital services for underserved individuals, communities, and MSMEs. The partnership will work on mobilising financing and establishing guidelines for digital financial inclusion financing instruments, with a focus on promoting these guidelines in the Asian market.
• Temasek Trust and the MAS have entered into a Letter of Intent to investigate a shared FinTech and impact investment strategy, along with an interoperable technology framework. The collaboration aims to foster cross-platform partnerships among open technology-based platforms and leverage their regional networks to design common platforms, drawing global capital to regional high-impact opportunities. The initiative seeks to boost investments in Singapore's financial sector, FinTech firms, and impactful projects, fostering growth locally and beyond.
• A dynamic partnership between SME Finance Forum, MAS and Microsoft was inked with an intent to propel SME development and growth.  
  
  

Cross-border Payments

Milestone regional and multilateral payment linkages were announced: 

• Singapore and Malaysia individuals will be able to have real-time payments through the PayNow-DuitNow linkage.
• Singapore and Indonesia will experience the same convenience with the launch of the connectivity between NETS QR and Indonesia’s QRIS. 

There is an ongoing vision to form a coalition of the willing to build a global public good payment utility for users around the world to be able to send money across borders in a secure, efficient and affordable way. Notable initiatives supporting this movement: 

• Project Nexus is a multilateral solution to link multiple national real-time payment systems. Read the technical proof of concept published by the BIS Innovation Hub for connecting the payment systems of the Eurosystem, Malaysia, and Singapore.
• An Interoperable QR payments whitepaper introduces the concept of an interoperable SGQR (SGQR+) as a potential solution for Singapore’s interoperable QR payments infrastructure of the future. By connecting payment providers and merchants seamlessly, SGQR+ aims to address current merchant challenges and unlock new avenues for digital inclusion. It signifies a commitment to nurturing innovation, promoting ease of doing business, and fostering a dynamic economy.

Other international cooperations and projects on the topic of cross-border and digital payments: 

• To promote inbound and outbound cross-border mobile payments, National Bank of Cambodia announced a partnership with Ant International to drive efficient and secure cross-border mobile payments via QR code.
• A month earlier, Project Mandala, a joint collaboration between BIS Innovation Hub Singapore Centre, Reserve Bank of Australia, Bank of Korea, Bank Negara Malaysia, and MAS with financial institutions was announced to explore the feasibility of encoding policy and regulatory requirements into a common protocol. Project Mandala aligns with the Financial Stability Board 2023 priority actions for achieving the G20 targets for enhancing cross-border payments in the area of promoting an efficient legal, regulatory and supervisory environment for cross-border payments while maintaining their safety, security and integrity.
  
• Bank of Canada announced new developments in regulation for digital payments to bolster confidence within the payment ecosystem itself by introducing a base level of supervision for new players.
  
  

ESG and Sustainability

Download key stats on the Outlook of Sustainability prepared by Elevandi

MAS launched Gprnt, an integrated digital platform that harnesses technology to simplify how the financial sector and real economy collect, access and act upon environmental, social and governance (ESG) data to support their sustainability initiatives. Grpnt is a culmination of Project Greenprint and will be managed by a newly-created entity to expand its cross-border capabilities to better serve the more sophisticated data needs of larger multinational entities and other regional economies. 

What you need to know: 

• COP28 in Dubai concluded with a call to ‘transition away’ from fossil fuels. Read Elevandi's summary of takeaways on UAE Consensus. COP 28 - The Transition by Elevandi’s Sustainability Advisor, Dr Darian McBain.
• To accelerate energy transition at scale in Asia, the Asian Development Bank (ADB), Global Energy Alliance for People and Planet (GEAPP) and the Monetary Authority of Singapore (MAS) announced their intent to establish a blended finance partnership which include projects such as the early phaseout of coal assets to be replaced with renewable energy, and decarbonisation projects in hard-to-abate sectors.
• The United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) published a report outlining Ten Principles for Action which distill the trends, insights, and opportunities for policy-makers, regulators and private finance actors in Asia-Pacific to mobilise and deploy sustainable finance, and help chart the way forward. Elevandi is pleased to have hosted a roundtable with ESCAP at the SFF 2022 that contributed to the findings in this report. 

Additional readings and news to follow

• In early 2023, the financial sector had a wake-up call after three regional and specialised banks in the US failed in rapid sequence, and a global systemic bank in Switzerland stood on the brink. While a state-supported acquisition of Credit Suisse by UBS tranquilised nervous markets and clients, it has raised broader questions on the viability of the ‘too big to fail’ regime. Swiss Financial Market Supervisory Authority FINMA has just published a report detailing lessons learnt from the Credit Suisse crisis to assist with the appraisal of the crisis. 
• The Rearchitecting the Financial System online certificate programme jointly developed by Elevandi Education and the Centre for Finance, Technology and Education aims to help learners stay ahead of the curve and to enhance their knowledge on the transformation of the financial system. Built on the Insight of Singapore Fintech Festival 2023, this course will help learners understand the key drivers reshaping finance and to get them acquainted with real-life projects, and discover new opportunities. Get a headstart in 2024 by registering here now to start learning in January. 
• More Elevandi Insights, reports and summaries from the 20 public-private roundtables will be published in January 2024. Subscribe here to be alerted when they’re published.