MAS (Monetary Authority of Singapore) Deputy Managing Director Jacqueline Loh on Thursday (25 March) outlined a set of projects underway in Singapore which demonstrate the benefits of central bank leadership in innovation.
Speaking at the BIS Innovation Summit, Loh talked about why central banks should embrace innovation, how they can support and facilitate innovation by the industry, and how they can channel innovation capabilities to address challenges in improving sustainability and enhancing cross-border payments.
Among the key initiatives she highlighted as examples, Loh said the BIS Innovation Hub Singapore Centre is spearheading a RegTech and SupTech project to pilot the development of an integrated regulatory reporting platform and data analytics utility.
The project, first revealed in January, will allow supervisors to assess microprudential and macroprudential risks by applying AI and machine learning tools to unstructured data and big datasets, Loh said.
“The application of such tools is enabled by transforming regulatory reporting to be based on the mapping of granular data to a common data model, moving away from fixed templates.”
According to Loh, the project has the potential to be scaled across supervisory authorities, providing a tangible example of a global public good that the BIS Innovation Hub can deliver “for the benefit of the central banking and supervisory communities”.
Loh also spoke of Project Ubin, which completed its fifth and final phase last year to explore the development of blockchain-based settlement systems. The project culminated in the development of a blockchain-based prototype for digital multi-currency settlement, which has paved the way for industry players to pursue commercial applications for the prototype.
DBS Bank, JP Morgan and Temasek are currently leading the development of a digital multi-currency payments network aimed at enhancing commercial cross-border clearing and settlements globally.
Loh also highlighted the role of central banks in supporting sustainable growth through green finance. She pointed to Project Greenprint, which was first announced by MAS in December as an initiative that would seek to deploy technology at different stages of supply chains to better monitor commitments to the green standards and requirements.
“For example, IoT devices could be deployed on-site to directly capture and assess relevant real-time data, such as energy and water consumption, by borrowers, portfolio companies, and suppliers,” Loh said. “It will also explore the application of AI and other technologies on third-party data sources, to quantify the ESG impact of potential investments and loan portfolios.”
MAS plans to work with a consortium of financial institutions, fintechs, industry players with expertise in Green FinTech, and like-minded central banks on the project, she said.
On cross-border payments, Loh pointed to a MAS initiative to interconnect Singapore and Thailand’s faster payment systems, PayNow and PromptPay, respectively. As announced last December, the linkage will go live in mid-2021.
Separately, the BIS Innovation Hub Singapore Centre, with support from MAS, is also exploring multilateral connectivity in cross-border payments, building on the Foundational Digital Infrastructures Project, based on traditional technologies, and Project Dunbar, a multilateral multi-CBDC wholesale settlement platform.
Loh said achieving multilateral connectivity will involve multiple centres of innovation, with each centre examining different aspects, models and technologies for enhancing cross-border payments.
“At the core of this, the BIS plays a critical role to set direction, forge consensus, and coordinate efforts to maximise synergies.”