The Monetary Authority of Singapore (MAS), Singapore’s financial regulatory authority, has founded a Project Guardian policymaker group in partnership with the Financial Services Agency of Japan (FSA), the Financial Market Supervisory Authority of Switzerland (FINMA), and the Financial Conduct Authority of United Kingdom (FCA), according to Monday press release published on the MAS’ website.
The MAS believes that the group will help facilitate industry pilots under MAS’ Project Guardian for digital assets through regulatory sandboxes to support the development and testing of new digital asset applications in a safe and controlled environment.
Furthermore, the policymaker group aims to promote discussions on the legal, policy, and accounting treatment of digital assets to ensure a clear and consistent regulatory framework across jurisdictions.
It’s also a knowledge-sharing hub among regulators and the industry to foster a deeper understanding of digital assets and support the responsible development of the digital asset ecosystem.
Singapore is a Leading Digital Asset Jurisdiction
Project Guardian was introduced by Singapore’s central bank in 2022. The collaborative initiative aims to develop a regulatory framework and sandbox environment that will allow the financial industry to experiment with new digital asset applications while mitigating risks.
The project has since seen several industry pilots underway. Moreover, it’s also supported by many leading financial institutions, including DBS Bank, JPMorgan Chase, and Standard Chartered Bank.
As part of the new group’s responsibilities, policymakers and regulators are committed to responsible digital asset innovation in “fixed income, foreign exchange, and asset management products.”
They can jointly develop common standards and regulatory frameworks that will support cross-border interoperability. As noted in the announcement, FINMA will join the group as an observer.
Sing Chiong Leong, Deputy Managing Director at MAS, said that the partnership demonstrated policymakers’ desire to strongly understand “the opportunities and risks arising from digital asset innovation.”
MAS looks to “promote the development of common standards and regulatory frameworks that can better support cross-border interoperability, as well as sustainable growth of the digital asset ecosystem,” the Director added.
MAS’ Updates on CBDC
The Central Bank of Singapore announced its exploration of digital currency by the end of last year. This move is considered a stepping stone to moving forward in establishing the necessary technical infrastructure and capacity for a retail CBDC.
However, the monetary policy maker has stated that it is still exploring the potential benefits and risks of a retail CBDC and that it has not yet made a decision on whether or not to issue one.
The bank reportedly joined forces with Banque de France, the Bank for International Settlements (BIS) Innovation Hub, and the Swiss National Bank to explore the use of automated market makers (AMMs) for cross-border trading and settlement of wholesale central bank digital currencies (wCBDCs).
The project, called Mariana, uses a public blockchain to create a transnational FX interbank market for hypothetical euro, Singapore dollar, and Swiss franc wCBDCs. The AMM pools the liquidity of these wCBDCs and enables spot FX transactions to be priced and executed automatically and settled immediately.
In June this year, MAS reportedly collaborated with the Bank of Italy, the Bank of Korea, and the International Monetary Fund to issue a white paper targeting the specific use cases of central bank digital currencies (CBDCs), stablecoins, and tokenized bank liabilities.
The document also introduced the concept of purpose-bound money (PBM) which allows depositors to specify the conditions for the use of money.
No entity wants to be left behind in the central bank digital currency (CBDC) race. While most central banks are exploring and developing their national digital currencies, China has tested its digital yuan in select cities and regions. The country also works with other countries to develop cross-border payment systems using the digital yuan.