Over the past few years, the Monetary Authority of Singapore (MAS) has kickstarted several collaborative fintech projects. These projects — many of which are ongoing — involve the areas of remittance, atomic settlement and programmable money, among others.
Here’s a brief round-up of these fintech projects.
Project Orchid
Project Orchid is a multi-year, multi- phase exploratory project examining the various design and technical aspects pertinent to a retail Central Bank Digital Currency (CBDC) system for Singapore.
Its objectives are to develop the technology infrastructure and technical competencies necessary to issue a retail CBDC (for example, a digital version of Singapore dollar notes) and to explore potential use cases for programmable money in Singapore.
The project’s first phase aims to uncover potential use cases for a programmable digital Singapore dollar and the required infrastructure. The project will subsequently investigate the optimal ledger technology to build a CBDC and its integration into the existing financial market infrastructure.
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In the first phase, Project Orchid explored purpose-bound money (PBM), a protocol specifying the conditions under which an underlying digital currency can be used.
The phase features four trials — one being the trial of government vouchers. At the Singapore Fintech Festival 2022, DBS Bank and Gov- Tech’s Open Government Products division tested the use of PBM, allowing participants to use RedeemSG vouchers at participating food and beverage outlets.
Project Guardian
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Project Guardian seeks to test the feasibility of applications in asset tokenisation and decentralised finance (DeFi) while managing financial stability and integrity risks. MAS is focusing on four main areas — open and interoperable networks, trust anchors, asset tokenisation and institutional-grade DeFi protocols.
The project seeks to explore the use of public blockchains to build open, interoperable networks that enable digital assets to be traded across platforms and liquidity pools. It also seeks to establish a trusted environment for the execution of DeFi protocols through a common trust layer of independent trust anchors.
Project Guardian will also examine the representation of securities in the form of digital assets and the use of tokenised deposit-taking institutions on public blockchains.
Lastly, the project studies the introduction of regulatory safeguards and controls into DeFi protocols to mitigate against market manipulation and operational risk.
The project’s first industry pilot saw financial institutions DBS Bank, JP Morgan and SBI Digital Asset Holdings conduct foreign exchange and government bond transactions against liquidity pools — consisting of tokenised Singapore Government Securities Bonds, Japanese Government Bonds, the Japanese yen and the Singapore dollar.
Project Ubin and Project Ubin+
First commencing in 2016, Project Ubin was launched to explore the use of blockchain and distributed ledger technology (DLT) for clearing and settlement services. The project aims to help MAS and the industry better understand the technology and the potential benefits it may bring through practical experimentation.
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After a five-year journey, Project Ubin’s Phase 5 was completed in 2020. The industry effort demonstrated that multi-currency payment and settlement across borders could be achieved at lower risk and costs in real-time.
The commercialisation of the findings in Project Ubin is being undertaken by Partior, a joint venture between DBS Bank, JP Morgan and Temasek. Partior is a blockchain-based platform enabling participants worldwide to transact with one another in real-time using different currencies rather than CBDCs. The main currency is the US dollar, and it has onboarded GBP, EUR JPY, CNH (offshore yuan) and HK$.
Moving forward, MAS will launch Project Ubin+, a global initiative on the cross-border exchange and settlement of foreign currency transactions using wholesale CBDCs.
Project Ubin+ will focus on three areas — to study business models and governance structures where settlements can be performed atomically to improve efficiencies and reduce risks; to develop standards to support the atomic settlement of currency transactions across DLT and non- DLT platforms; as well as to establish policy guide for the digital currency infrastructure across borders for better access and participation.
Through Ubin+, MAS will collaborate with international partners to explore a broader range of atomic settlement solutions. One is Project Mariana, a collaborative initiative exploring the exchange and settlement of Swiss franc, euro and Singapore dollar wholesale CBDCs with an automated market maker arrangement. This project involves MAS, the central banks of France and Switzerland, and the BIS Innovation Hub.
Project Dunbar
Following the success of Project Ubin, MAS announced Project Dunbar in 2021, exploring how multiple central bank digital currency (m-CBDC) platforms can be designed and developed as international settlement platforms cooperatively managed by the global central banking community. This is done by partnering with BIS Innovation Hub and the central banks of Australia, Malaysia and South Africa.
In March, it was announced that Project Dunbar has successfully completed the prototypes for a common platform enabling international settlements using m-CBDCs. The platform was designed to facilitate direct cross-border transactions between financial institutions in different currencies, with the potential to cut costs and increase speed.
The project also identified the challenges of implementing a m-CBDC platform shared across central banks, proposing practical design solutions to address them.
Project Nexus
In July 2021, MAS partnered with BIS Innovation Hub to publish a proposed blueprint to enhance global payments network connectivity via multilateral linkages of countries’ national retail payment systems. Titled Project Nexus, the blueprint outlines how countries can fully integrate their retail payment systems onto a single cross-border network — allowing customers to make cross-border transfers instantly through their mobile phones or Internet devices.
MAS continues to work with BIS Innovation Hub, aiming to address the challenges of speed, cost, access and transparency. It seeks to bring faster speed (transaction cleared in 60 seconds on a 24/7 basis), lower cost (less than 3% transfer value), wider access (enable connectivity for banks as well as non-bank financial institutions), greater transparency (upfront certainty on fees due and immediate update on transaction status) and high security (leveraging on strong security and risk mitigation protocols).
With Nexus, each country would only need to link its real-time payment system once to a “Nexus gateway”, providing direct connectivity to all the other countries already within the network. Nexus is also a unified solution that coordinates payment, foreign exchange conversion, message translation, and compliance — streamlining the entire cross-border payment process.
PayNow-PromptPay is linked to Nexus’ technology. Potential linkages include PayNow-DuitNow and PayNow-UPI (India’s unified payments interface).
Project Greenprint
Project Greenprint is a collection of initiatives that aims to harness technology and data to enable a more transparent, trusted and efficient environmental, social and governance (ESG) ecosystem to enable green and sustainable finance.
Project Greenprint has focused on four digital utilities — an ESG disclosure portal; an ESG registry of green certifications; a data orchestrator; and a digital marketplace.
MAS is piloting the ESG Disclosure Portal with the Singapore Exchange (SGX), enabling listed companies to carry out baseline sustainability reporting against 27 core metrics. Dubbed “ESGenome”, the SGX portal allows companies’ one-time inputs to be automatically mapped across a range of major sustainability standards and frameworks. Sustainability reports can be automatically generated from these inputs.
Meanwhile, the ESG Registry uses DLT to record and maintain the provenance of green certifications issued by various sectoral bodies. The “ESGpedia” allows banks to access various green certifications through a single interface.
Data orchestration entails aggregating ESG data from multiple sources to meet specific green and transition financing needs. MAS will partner with financial institutions to integrate more advanced datasets into their financing frameworks.
Lastly, the digital marketplace aims to synergise connectivity across the Greenprint utilities and facilitate access to ESG data. MAS plans to launch the digital marketplace in 2023
