Introduction
Singapore and the United Kingdom (UK) recently signed a Memorandum of Understanding (MoU) to strengthen bilateral cooperation on fintech and sustainable finance to optimize the regulation of finance in today’s digital era. The MoU was signed on November 25, 2022, at the seventh UK-Singapore Financial Dialogue held in Singapore.
Singapore is the leading fintech hub and sustainable finance power in Asia today and beginning in 2021, more than 40 percent of fintech companies in Southeast Asia were based in Singapore, underscoring its role as ASEAN’s financial center with a growing number of Singapore Company Incorporation from the foreign investors.
The recent MoU has been built upon the UK-Singapore FinTech Bridge which was launched in May 2016 in London during the sixth UK-Singapore Financial Dialogue by HM Treasury and the Monetary Authority of Singapore (MAS). The Bridge is structured by a regulatory cooperation agreement signed between the Financial Conduct Authority (FCA) and the MAS and enables the regulators to refer fintech firms that meet set eligibility criteria to their counterparts and sets out the process of sharing and using the information on financial services innovation by the regulators.
Key Features
Sustainable Finance
Collaboration on Sustainable finance was discussed between the two countries within the context of the Paris Agreement to limit global warming.
The two countries agreed to work together on transition finance such as boosting international consistency in the design and disclosure of transition plans.
The two countries agreed to continue working with international organizations to implement a global reference for sustainability-related disclosure standards including climate-related financial disclosures.
The requirement for a globally consistent framework for nature-based disclosures was also agreed upon, including collaboration on enhanced comprehension of the potential for natural degradation to create financial risks.
Fintech
Opportunities and challenges in the crypto and blockchain markets were also discussed and besides sustainable finance, the two countries agreed to collaborate on the fintech space.
An immediate need for a safe digital ecosystem of assets was agreed upon by both countries. The risks associated with volatile crypto assets and financial stability were discussed including the progress made on strengthening consumer protection and regulating stablecoins. Both agreed to work in association with international bodies to help stabilize digital assets.
Other fintech developments in recent times were also discussed including e-wallet caps and digital banking in Singapore.
At the beginning of 2022, Singapore and the UK signed the Digital Economy Agreement aiming at advancing digital trade by standardizing e-payments and e-invoicing systems and encouraging enhanced participation from the UK-based SMEs with foreign company registration in Singapore. Moreover, in late 2020, Singapore and the UK also signed a Free Trade Agreement, as the UK’s first FTA with a Southeast Asian country. The free trade agreement reduced non-tariff barriers, reduced tariffs, and provided improved market access in the financial services sector.
The Takeaway
In all likelihood, the UK-Singapore FinTech Bridge will build the stage for increased cooperation on fintech and sustainable finance over the coming years. The Singapore-UK partnership is likely to strengthen more with Singapore leading the fintech and sustainable finance in South East Asia.
