SINGAPORE (Mar 7): Ravi Menon, managing director of the Monetary Authority of Singapore (MAS), says the central bank is committed to partnering global financial institutions and companies to realise the potential of blockchain technology in Singapore.
“My plea to you is pick a viable use-case [for blockchain technology] with deep economic or social impact and work towards bringing it to life,” says Menon on Thursday at CordaDay Singapore 2019, a blockchain-centred conference.
The event was attended by representatives from over a hundred financial institutions and companies globally. It was organised by R3, a blockchain technology company which MAS supported under the Financial Sector Technology and Innovation (FSTI) scheme.
“As one of the leading blockchain centres in the world, Singapore is a great place where you can collaborate, experiment, and scale. We have a strong pool of talent and expertise within the blockchain ecosystem,” Menon adds. “MAS, as the central bank and financial regulator, is committed to partnering you on this journey.”
Already, Singapore’s financial sector has applied blockchain technology “with good prospects” in at least two use case experiments.
The first was Project Ubin, which began in 2016 as a collaborative effort among MAS, the Singapore Exchange (SGX), banks, technology companies, and academic institutions, to ease the clearing and settlement of payments and assets.
“The grand vision in the payment and settlement space is a blockchain based system that allows 24/7 cross-border transactions that can be settled in close to real-time,” Menon says.
Singapore has also embarked on the TradeTrust project, which uses blockchain to potentially link up different parties in global trade and facilitate the flow of information across the trade value chain.
TradeTrust is led by the Info-communications and Media Development Authority (IMDA), in partnership with Maritime and Port Authority of Singapore, and supported by Singapore Customs and the Singapore Shipping Association.
“The replacement of paper-based documents with electronic documents verified on the blockchain will improve the flow of trusted data across transacting parties and enable increased automation of trade processes,” Menon says.
“This will not only improve the efficiency of the trading and logistics sectors, but also create opportunity for the financial sector, especially in cross-border trade finance,” he adds.
According to Menon, MAS is also working with the Hong Kong Monetary Authority (HKMA) to develop the Global Trade Connectivity Network as a cross-border infrastructure to digitalise and facilitate trade and trade finance.
“As banks are plugged into the network, documentary trade finance could become more digitised, and securing of trade finance could become faster, more efficient and transparent,” he says.
Calling blockchain “one of the most misunderstood technologies in recent times,” Menon highlighted several misconceptions about blockchain.
These include the false impression that blockchain is all about crypto currencies or tokens; that it is inadequate for enterprise usage because it is slow, inefficient, and scales poorly; and that there is no business value for the use of the blockchain.
However, the central bank chief cautions against misunderstanding that blockchain is the solution for all kinds of problems.
“While the blockchain holds promise as a solution for some of industry’s big problems, it is not a solution for every problem,” he says.
