Asean planning regional payments network that could benefit migrant workers
- Project Nexus connects the various fast payment systems that countries have built for domestic transfers, such as Singapore’s Pay Now
- System could ease barriers and fees that are ‘particularly painful’ for migrant workers sending money back home, small businesses with overseas reach
Delivering a speech at the Singapore Fintech Festival on Thursday, Ravi Menon highlighted Project Nexus, a joint initiative by the Monetary Authority of Singapore (MAS) and the Bank for International Settlements, as a possible “key enabler” that could help achieve the Southeast Asian bloc’s goal.
In a nutshell, Project Nexus connects the various fast payment systems that countries have built for domestic transfers, such as Singapore’s Pay Now.
Some 60 countries already have these real-time payment systems which allow users to send money to someone in the same country instantaneously.
Still, the global average cost of sending money across the border remains at 6 per cent of the bank transfer.
Linking these real-time payment systems could ease the barriers and fees that are “particularly painful” for migrant workers who want to send money to families back home and small businesses that have an overseas reach, Menon said.
“MAS believes that Project Nexus can be a key enabler towards realising this vision. Asean is well placed to be a first-mover on this multilateral solution,” he said.
During his speech, Menon described cryptocurrencies as a “non-starter” in the programmable money space, saying they had “performed poorly as a medium of exchange as well as a store of value”.
“Given its volatility and speculative nature, cryptocurrencies do not hold promise to serve as money in the first place,” he said.
These remarks echo similar comments by officials that clearly indicate Singapore plans to henceforth take a rigid stance on mass market cryptocurrency trading following years of a relatively relaxed approach.
The city state was buffeted by blow-ups amid this year’s cryptocurrency rout, such as at Three Arrows Capital hedge fund and cryptocurrency lender Hodlnaut. An index of top tokens is down 58 per cent so far in 2022, leaving many investors nursing losses.
“If a crypto hub is about experimenting with programmable money, applying digital assets for use cases or tokenising financial assets to increase efficiency and reduce risk in financial transactions, yes, we want to be a crypto hub,” Menon said. “But if it is about trading and speculating in cryptocurrencies, that is not the kind of crypto hub we want to be.”
Proposed new rules to regulate retail cryptocurrency trading include banning monetary and non-monetary incentives such as bonuses for consumers, placing the onus on cryptocurrency service providers to ensure customers have “sufficient knowledge” of the risks involved among others.
Singapore’s tough stance on retail trading was also a subject of discussion at other panels, with Ethereum co-founder Vitalik Buterin defending the value of cryptocurrencies.
Given Singapore’s relatively stable political and economic situation, he said it was “easier” for the government to describe cryptocurrencies as unstable and low in value when this was not the case for countries faced with a depreciating currency.
“If you interview people there, they’ll say: ‘Well, cryptocurrencies rise and fall, but the local fiat falls and it falls’,” he said.
Binance CEO Changpeng Zhao said while he understood Singapore’s “somewhat restricted” rules, the government should re-evaluate this approach given that Hong Kong was opening up its retail access.
Meanwhile, a report on Asean’s fintech industry revealed the share of global fintech funding in the 10-member bloc went up to 7 per cent this year, up from 2 per cent in 2018.
Singapore and Indonesia contributed more than three quarters of Asean’s total funding, with Indonesia making a 11 per cent jump from last year.
The report, launched by UOB, PwC and Singapore Fintech Association, sought the views of more than 4,000 industry leaders and examined sentiments towards embedded finance and how companies can make gains in this emerging sector.
Additional reporting by Bloomberg