On November 25, 2022, the United Kingdom and Singapore signed a Memorandum of Understanding on a bilateral agreement aimed at modernizing and boosting innovation in the fintech and sustainable finance sectors. The agreement, known as the UK-Singapore Fintech Bridge, is intended to create a foundation for investing in fintech while also regulating it to mitigate the possible risks of advancement.
Singapore is the top country in Southeast Asia for technology and is considered ASEAN’s financial center, with 40% of fintech companies located within the country. The partnership between the UK and Singapore, as advanced countries, is expected to have positive implications and could influence industries and policies globally.
The instability of blockchain and cryptocurrency poses both opportunities and risks.
- Crypto assets: UK and Singapore are looking to create a well-managed digital asset by consulting with the Committee on Payments and Market Infrastructures (CPMI) and the Financial Stability Board (FSB).
- Digital Payments: Singapore shared the latest news about new digital banks in the country and updates on e-wallets.
The understanding between Singapore and UK is based on Paris Agreement’s aim of limiting global warming to 1.5 degrees Celsius.
- Nature-based Approach: The agreement includes a nature-based approach, which aims to come up with a framework for biodiversity and natural capital, to help determine the issues and loss that might be caused by the development of fintech.
- Disclosure and Transparency: Both countries will seek help from institutions like the International Sustainability Standards Board (ISSB) and the International Organization of Securities Commissions (IOSCO) to establish standards for climate and finance-related disclosures.
- Transition Finance: Transition finance is another area of cooperation, with both countries working with the UK Transition Plan Taskforce and the Singapore-based Asia Pacific office of the Glasgow Financial Alliance for Net Zero to transition to a more decarbonized society.
- Greenwashing: The agreement includes measures to fight greenwashing, which is when a company gives the impression that it is sustainable when it is not. Singapore’s Project Greenprint is part of this effort, which aims to establish better regulation on ESG rates.
In conclusion, the UK-Singapore Fintech Bridge is a significant step towards modernizing and boosting innovation in the fintech and sustainable finance sectors.
The partnership is expected to have a positive impact on industries and policies globally, while also addressing the key challenges.