At the eighth UK-Singapore Financial Dialogue in Singapore, the two governments agreed to a Memorandum of Understanding on the UK-Singapore FinTech Bridge on November 25, 2022. The FinTech Bridge is not a legally binding pact, but rather a structured engagement to collaborate on industry challenges, share information, stimulate innovation, and establish a future regulatory framework.
Singapore is a leading fintech and sustainable finance force in Asia. Singapore was home to more than 40% of Southeast Asia’s fintech enterprises at the start of 2021, highlighting the city-status state’s as ASEAN’s financial capital.
As two major financial powers, Singapore and the United Kingdom’s collaboration on fintech and sustainable finance has the potential to influence global policy and regulation in these areas. We examine the agreement’s essential characteristics and the consequences for Singapore’s rise as Asia’s foremost hub for fintech and sustainable finance.
In fact, the FinTech Bridge is a structured collaboration between Singapore and the United Kingdom to develop policies and share best practises in the promotion and regulation of fintech.
As a result, the FinTech Bridge can be viewed as a beginning point for the establishment of a shared regulatory strategy among countries trying to protect fintech innovation and investment while addressing the sector’s lack of regulation and the risks it poses to the financial system. It also aims to direct the evolution of sustainable finance by identifying areas for universal norms and regulation.
Singapore and the United Kingdom discussed sustainable finance partnership in the context of the Paris Agreement’s goal of reducing global warming to 1.5 degrees Celsius above pre-industrial levels.
Singapore and the United Kingdom agreed to collaborate on transition financing, including promoting international consistency in transition plan design and transparency. They will investigate partnership prospects with partners such as the UK Transition Plan Taskforce and the Glasgow Financial Alliance for Net Zero’s Asia Pacific branch in Singapore.
The two governments will continue to collaborate with international organisations such as the International Organization of Securities Commissions (IOSCO) and the International Sustainability Criteria Board (ISSB) to create a worldwide baseline of sustainability-related disclosure standards. They will also introduce required climate-related financial disclosures gradually.
Singapore and the United Kingdom agreed that authorities should continue to debate how to implement a “global, consistent, and coordinated approach” to ESG rate regulatory supervision in order to combat greenwashing and promote comparable and trustworthy statistics. Technology solutions such as Singapore’s Project Greenprint will be critical in enabling such an attempt.
Both countries agreed on the importance of establishing a worldwide framework for nature-based disclosures. They also committed to work together to increase capacity and awareness of the potential for environmental loss and degradation to produce financial risks and have negative consequences for business and society. They will accomplish this by collaborating with academics from both countries.
In addition to sustainable finance, Singapore and the United Kingdom addressed fintech collaboration. This discussion took place in the setting of an uncertain cryptocurrency and blockchain technology market that provides both short-term and long-term concerns.
Singapore and the United Kingdom have a “strong agreement” on the need to assist the safe and risk-managed growth of a digital asset’s ecosystem. They reviewed the risks and challenges that cryptocurrency assets bring to financial stability, as well as their respective advances in tightening consumer protection legislation and regulating stablecoins. Both underlined their commitment to continue working with international organisations such as the Financial Stability Board (FSB), the Committee on Payments and Market Infrastructures (CPMI), and the International Organization for Standardization (IOSCO) to develop global regulation of digital assets.
Finally, the two countries exchanged information about additional fintech advances. Singapore, in particular, reported progress on its assessment of e-wallet caps and gave information on new digital banks that have formed in the country.
At this point, the UK-Singapore FinTech Bridge has identified various areas for the two nations to engage on the development and regulation of fintech and sustainable finance, but it lacks specific accomplishments. It will be obvious whether the FinTech Bridge is resulting in policy progress by the time of the next discussion, which will be place in London in 2023.
Regardless, the FinTech Bridge demonstrates Singapore and the UK’s continuously developing ties after the latter exited the European Union and sought stronger commercial links with Asia. It is a partnership that has elevated finance and the digital economy to prominence.
Singapore and the United Kingdom inked the Digital Economy Agreement in early 2022, making it the first digital-focused trade agreement signed by a European country. The agreement focuses on developing digital trade by standardising e-payment and e-invoicing technologies and encouraging involvement from small and medium-sized businesses.
Furthermore, in late 2020, Singapore and the United Kingdom inked a Free Trade Agreement, the United Kingdom’s first with a Southeast Asian country. Tariffs were reduced, non-tariff obstacles were reduced, and market access was expanded, notably for financial services.
Within the context of Singapore and the UK’s growing economic connection, it is likely that the UK-Singapore FinTech Bridge will pave the way for future collaboration on fintech and sustainable finance. This collaboration will help to cement Singapore’s position as Asia’s leading centre for both fintech and sustainable finance.
