Singapore Monetary Authority Recognizes Blockchain's Potential for Cross-Border Transfers

Sopnendu Mohanty, chief financial officer at the Monetary Authority of Singapore (MAS), the country's financial regulator, said blockchain technology could potentially speed up cross-border transfers. Mohanty, a former Citigroup senior executive, also said that he "did not see much" potential in the central bank's digital currencies (CBDCs).

Regulators have begun to explore cases of blockchain use in 2016

Mohanty, whose comments were voiced at the Blockchain in Business event held May 2 at the Mbadachusetts Institute of Technology (MIT), pointed out that in 2016, lawmakers did not know the various benefits or cases use of distributed accounting technology.

A few years ago, the MSA began experimenting with several block chain-based solutions, Mohanty revealed. At the time, MSA officials had conducted various tests to better understand how DLT compatible platforms could be used to settle transactions.

The digital currencies of the central bank may not be useful

According to Mohanty, MSA staff members have now learned to use blockchain technology to potentially improve several routine business processes. For example, MSA staff worked on projects involving the use of DLT to manage payments in the banking sector. They also explored how block-based payments can be charged to securities and how the general ledger can be used to make cross-border transfers.

As mentioned, Mohanty and his colleagues have not been able to find a legitimate use case of the central bank's digital currencies (CBDCs) in a typical retail economy.

In his speech at the Blockchain for Business event, Mohanty said Canadian and Singaporean central banks had already used blockchain-based solutions to conduct digital currency transactions. Commenting on the initiative, Mohanty said:

The next wave of blockchain projects from the central bank can further progress by combining technology exploration with policy issues related to the future of cross-border payments.

Crypto-currencies are not considered legal offers

In January 2019, MAS issued a false misrepresentation warning that Singapore's central financial institution was planning to launch its own cryptocurrency. In its warning letter, the Singapore Ministry of Justice also highlighted the main risks badociated with the treatment of cryptocurrencies, including their relatively high volatility and potential for illicit financial activities.

As noted by the country's Ministry of Justice, cryptocurrencies are not considered legal tender in Singapore. Asian residents have also been advised to be cautious when engaging in cryptocurrency transactions, likely because of the large number of scams badociated with them.