Source of this article: Golden Finance
Author: Taylor W
Singapore News: On January 7, 2020, the Monetary Authority of Singapore (MAS) announced that as of December 31, 2019, applications had been closed and 21 digital banking license applications had been received. These include 7 applications for Full Digital Banking (DFB) licenses and 14 applications for Digital Wholesale Banking (DWB) licenses.
The Monetary Authority of Singapore (MAS) is Singapore's central bank and comprehensive financial regulator. As the central bank, the HKMA promotes non-inflationary economic growth by implementing monetary policy and macroeconomic monitoring and analysis. It manages Singapore's exchange rate, official foreign exchange reserves and banking sector. As a comprehensive financial authority, the HKMA oversees all financial institutions in Singapore, including banks, insurance companies, capital market intermediaries, financial advisory bodies and stock exchanges.
The latest announcement states that 21 applications include e-commerce companies, technology companies, telecommunications companies, fintech companies (such as crowdfunding platforms and payment service providers) and financial institutions. MAS will announce successful applicants in June 2020. Successful applicants are expected to start business in mid-2021.
Regarding digital banking licenses, only two DFB licenses and three DWB licenses were finally approved. The DFB license allows withdrawal of deposits from retail and non-retail customer groups and provides banking services. DWB licenses allow deposits and banking services from SMEs and other non-retail customer sectors.
It is reported that the applicant must first meet the following conditions: business history, appropriate and appropriate shareholders, directors and management, capital commitments, a clear value proposition and a sustainable business model. Applicants for DFB permits must also reside in Singapore, be controlled by Singaporeans, and be headquartered in Singapore. In addition, the growth prospects of applicants and their contribution to Singapore may be examined, such as employment opportunities for Singapore and commitment to the development of local labor skills.
Therefore, applications such as Ant Financial, Xiaomi or Sea to apply for digital banking licenses are mainly for the Southeast Asian market and new business attempts. Starting in 2017, going to sea is also one of the directions of many large factories. But Singapore's digital banking license may be more attractive to blockchain companies in addition to the giants that own financial services.
Prior to this, Singapore has carried out many fintech innovation attempts, including digital currency, cryptocurrency and the underlying implementation of blockchain technology.
On May 2, 2019, the Bank of Canada and the Monetary Authority of Singapore (MAS) successfully conducted a cross-border and cross-currency payment experiment using a central bank digital currency. Can improve efficiency and reduce cross-border payment risks.
Cross-border payments usually rely mainly on a network of correspondent banks, which is slow, expensive, and vulnerable to risks from counterparties or inefficient management. Bank of Canada and the Monetary Authority of Singapore have been working together to use distributed ledger technology (DLT) and central bank digital currencies to make the cross-border payment process cheaper, faster and more secure.
The two central banks have successfully connected their respective experimental domestic payment networks, Jasper and Ubin, which are built on two different DLT platforms. The project team uses a technology called "Hash Time Locked Contracts (HTLC)" to connect the two networks and allow PvP solutions without the need for a trusted third party to act as an intermediary. The Jasper-Ubin project is carried out in collaboration with Accenture and JP Morgan, each of which has a Canadian network on Corda and a Singapore network on Quorum.
The Ubin project is a Singapore-industry collaboration project to explore the use of blockchain and distributed ledger technology (DLT) for the settlement and settlement of payments and securities. This project helps MAS and the industry to better understand the technology and its potential benefits through practical trials. The ultimate goal is to develop easier-to-use and more efficient alternatives to today's systems based on digital tokens issued by the central bank. The project has four phases:
Phase 1: MAS cooperated with R3 and the financial institution consortium to conduct a concept project verification, mainly to achieve inter-bank payment based on blockchain technology. After the end, a report was issued to introduce the DLT that is most suitable for the settlement system.
Phase 2: MAS and Singapore Banking Association (ABS) leaders have successfully developed software prototypes of three different models for settlement of decentralized interbank payment and savings mechanisms. MAS and ABS release reports describing development prototypes and project findings and observations. Source code and technical documentation have also been released for public access under the Apache License version 2.0.
Phase 3: Delivery and Payment (DvP) MAS and Singapore Exchange (SGX) cooperate to develop the Delivery and Payment (DvP) function, complete the settlement of tokenized assets between different blockchain platforms, jointly release industry reports, explain the implementation of DvP intelligence Contract automation settlement process. The report also identified a framework for overseeing the post-trade settlement process.
Phase 4: Cross-border Payments and Payments (PvP) Bank of Canada (BoC), Bank of England (BoE) and MAS jointly released a report evaluating alternative models that could enhance cross-border payments and settlement. The report examines existing dilemmas and considers alternative models that may allow users to increase speed, as well as cost and transparency. Subsequently, experiments using central bank digital currencies for cross-border and cross-currency payments were successfully conducted.
On November 11, 2019, the Monetary Authority of Singapore (MAS) announced that it has completed the successful development of a blockchain-based prototype that can use different currencies to make payments on the same network. Officially, this is the latest milestone in the fifth phase of the Ubin project. To date, MAS has partnered with more than 40 financial and non-financial companies to explore the potential benefits of the network.
In addition to technological advances, Singapore has made more regulatory explorations in financial supervision, such as the control of cryptocurrency derivatives
The MAS regulates crypto derivatives that are listed and traded only on approved exchanges, and prohibits extending the regulation of crypto derivatives beyond approved exchanges. And issued a notice to all financial institutions, requiring institutions to comply with regulations when providing crypto products to retail investors. These include tailored warning requirements for investors.
In addition, Singapore and China have also tried to cooperate with financial regulators.
On October 21, 2019, the Monetary Authority of Singapore (MAS) and the China Banking and Insurance Regulatory Commission (CBIRC) signed the CBRC-MAS Regulatory Memorandum of Understanding to strengthen regulatory cooperation and promote the Insurance regulation and crisis management.
The memorandum of understanding confirms the close partnership between the two regulators and will facilitate new initiatives by Chinese and Singaporean financial institutions to expand in each other's markets.
For example, DBS Bank will obtain a settlement agency license from the People's Bank of China (PBC). DBS will be able to settle transactions on behalf of foreign investors and provide custody for China's interbank bond market instruments.
In addition, MAS and the People's Bank of China will establish a cooperation mechanism to enable designated Singapore and Chinese banks to provide custody and trading services to regional and global investors in the Chinese bond market.
Singapore is currently accelerating and working towards the Asian financial innovation center. We have seen Singapore have many attempts in finance, which has an important role in promoting the development of capital and industry, but the focus of finance is still on supervision and implementation. At the same time as supervision, the beginning of hope, leaving more opportunities for entrepreneurs.