MAS’ Chia Der Jiun touts potential of asset tokenisation, quantum

Security is already a concern when considering the potential of quantum.

Asset tokenisation is one of the key areas that Singapore is exploring for its “potential” to improve the financial system, although its top central banker noted that it is still a challenge to realize its full potential.

Tokenisation is expected to cut duplication and costs, as well as increase speed of settlements, said Chia Der Jiun, the managing director of the Monetary Authority of Singapore (MAS).

“[Global financial institutions] know that it works, and the economic benefits are clear to all participants,” Chia told attendees of the Singapore Fintech Festival 2024, where he spoke at a fireside chat on 7 November.

Chia touted MAS’ tokenisation efforts under Project Guardian, where it worked private and global financial institutions to explore tokenisation use in a plethora of finance functions.

Use cases were identified in multi-currencies, payment settlement, foreign exchange, treasury management, collateral management, and security settlement.

Despite these use cases, Chia said that there it is still a challenge to get to that potential.

Amongst challenges are the need to set up regulation for exchange, industry frameworks, and standards. 

Regulators also have to form a “high quality settlement asset” or a digital money that is on-chain.

MAS will also need to set up an infrastructure that is interoperable across networks so that different tokens can be connected; as well as compatible with compliance.

For their part, MAS has already set up a stablecoin regulatory framework in 2023, and are working on legislation as of 2024, Chia said.

Not too early for quantum
Chia also touched upon quantum technology, saying that “it’s not too early” for it.

“I think that’s the thing that most people have in their minds, because quantum computers are still in the lab and not commercial grade. But is it too early? No, it’s not too early, especially on the security front,” Chia said.

Chia warned of hackers who reportedly already harvest data to break later when quantum technology becomes available.

“We have to look into security, post quantum encryption, as well as quantum key distribution,” he said.

Beyond security issues, Chia said that it’s also not too early to think of use cases for quantum, citing its potential to grant computing power greater than classical computers.

Improving local, cross-border payments
Chia also discussed Singapore’s efforts to make its local payments more interoperable whilst pushing cross-border payments to be faster and cheaper.

Chia highlighted MAS’ efforts with Project Nexus in order to achieve their vision for a low cost, accessible, fast domestic payments and cross-border payments.

“We think [Project Nexus] is a game changer…it’s like a central switch, and it [has] single framework standards, so that you won’t have to form bilateral linkages,” Chia said in a fireside chat.

Chia noted how much time and resources it took to form bilateral linkages with several Asian countries like India, Malaysia, and Thailand.

In contrast, with a central switch like Project Nexus, the markets will just need to connect to the central switch and adopt a single framework, and they can have access to the whole framework.

“This, I think, has the potential to transform cross border payments and make it much more accessible in a low cost, fast way,” Chia said.