The Monetary Authority of Singapore (MAS), also the central bank, has released a report on the framework for creating interoperable networks for digital assets. The report is part of the regulator's measures to ensure that emerging digital asset networks are safe and efficient.
Dubbed 'Enabling Open & Interoperable Networks', the report was developed in collaboration with experts at the Bank of International Settlements (BIS), Committee on Payments and Market Infrastructure (CPMI). The project also attracted contributions from participating financial institutions, according to a statement published today (Monday).
Evolving Digital Networks
Furthermore, the report considers the application of the CPMI-IOSCO principles for financial market infrastructure to the evolving models of digital networks. The principles focus on the international standards for payments systems, central securities depositories, securities settlements, central counterparties, and trade depositories.
Additionally, MAS has announced an expansion of the 'Project Guardian' to assess the potential of asset tokenization across more financial asset classes. In this regard, MAS has established the Project Guardian Industry Group, which brings together 11 financial institutions. Project Guardian is the regulator's initiative to test the feasibility of asset tokenization and Decentralized Finance (DeFi).
The enlisted financial institutions in the initiative would test asset tokenization across financial asset classes. Major banks, including HSBC, Standard Chartered, Citi, and DBS, would carry out pilot studies across wealth management, fixed income, and foreign exchange, the regulator noted.
According to MAS' past statements, the regulator has shown commitment to the technologies underpinning digital assets. However, the watchdog is keen to restrict the risks associated with digital assets, including stablecoins and CBDCs.
MAS Explore Efficiency in Digital Networks
Leong Sing Chiong, MAS' Deputy Managing Director of Markets and Development, commented: "While MAS strongly discourages and seeks to restrict speculation in cryptocurrencies, we see much potential for value creation and efficiency gains in the digital asset ecosystem."
Most recently, MAS proposed standards for the use of digital money, including CBDCs and tokenized bank deposits on a distributed ledger. The proposal looked into how settlement efficiency, merchant acquisition, and user experience in digital assets can be achieved.
The technical paper was produced in partnership with the International Monetary Fund (IMF), Bank of Italy, and Bank of Korea, among other financial institutions.
