Financial Sector in Singapore Gears Up for the Future Economy: MAS in Support of the CFE Recommendations

February 15, 20177:55 am1178 views

In light of the recent Committee on the Future Economy (CFE) recommendations presented to the Prime Minister last week, the Monetary Authority of Singapore (MAS) highlighted on how it will support recommendations by the CFE to help position financial sector in Singapore for the future.

MAS intend to initiate couple of specific measures to include, strengthening of financing channels for next-generation Asian growth companies and build technology infrastructure to support innovation.

With Singapore aiming to be the financing hub for the next-generation Asian growth companies – to include start-ups, SMEs or early-stage enterprises, who often have strong focus on innovation and technology, MAS will be announcing funding initiatives in the next few days to support their growth plans.

MAS will further simplify the authorisation and ongoing regulatory requirements for VC managers to allow them to operate more nimbly in supporting start-ups in Singapore and the region. The monetary authority will also be looking at deepening the pool of PE managers in order to draw in more capital for late stage and mature start-ups. In the coming year, MAS will examine the scope to streamline rules and enhance the operating environment for PE managers.

SMEs are a core pillar of Singapore’s economy, contributing about half of GDP and two-thirds of employment. While their financing needs are generally well met, more can be done to encourage more customised small business lending.

Finance companies are important players in the market segment, given their focus on developing strong links with small business owners and understanding their business models. MAS will adjust the regulations that apply to finance companies, with a view to enhancing their ability to better meet the financial needs of SMEs while ensuring prudent risk management.

In the year ahead, MAS will work with industry players to study successful private market structures in other financial centres and engage potential platform and market operators, with the aim of introducing such solutions in Singapore.

See: Financial Institutions in Singapore Need to Adopt APIs to Keep Pace with the Digital Economy

The CFE report recommends harnessing the transformative potential of digitalisation for innovation and growth. MAS has been working closely with the industry on technology infrastructure projects to drive innovation, boost market efficiency, enhance customer service, and extend Singapore’s connectivity with the region.

“The underlying thrust of MAS’ various initiatives is to provide a conducive environment for innovation – which is critical for the future of financial services. We do this through a judicious regulatory framework and enabling technology infrastructure. And even as we allow more risk-taking, we want to do so without compromising on the safety of financial institutions and the stability of the financial system,” said Mr Ravi Menon, Managing Director, MAS.

MAS is working with banks to anchor e-FX trading platforms that can help to enhance price discovery and FX trade execution, especially for Asian currencies. This will enable market participants to benefit from better liquidity and greater efficiency in executing FX transactions, and sharpen Singapore’s edge as Asia’s leading FX hub.

MAS will support the financial sector in the region by promoting broader use of electronic payments to enhance consumer convenience and business productivity. Singapore already has a strong payment infrastructure in the form of Fast and Secure Transfers (FAST), which enables secure, real-time, inter-bank payments.

The banking industry will implement a Central Addressing Scheme in Q3 2017 to allow users to make fund transfers through FAST by using proxies such as mobile numbers and NRIC numbers instead of bank account numbers. In view of the growing prevalence of QR-code payments in Singapore, MAS is also looking at working with the industry to develop interoperable standards for such payments.

Also read: Fintech is Shaking up the Banking and Financial Services Industry in Singapore

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