MAS chief wants to shine a light from which even the West can draw regulatory comfort
HONG KONG • His words don't carry a fraction of Fed chair Janet Yellen's power to move markets; nor do his actions possess the strength of Mr Haruhiko Kuroda's balance-sheet manoeuvres at the Bank of Japan.
He isn't an intellectual in the mould of economist Andy Haldane at the Bank of England, or Dr Raghuram Rajan, the former governor of the Reserve Bank of India.
Yet this central banker from a nation of 5.6 million people, a policymaker who doesn't even set his own interest rates or issue a currency that's widely held overseas, is front and centre of a revolution in global finance.
Mr Ravi Menon, managing director of the Monetary Authority of Singapore since 2011, is the architect of the most audacious makeover of Singapore's financial system in 50 years.
But unlike in 1968, when a newly independent Singapore merely wanted to be trusted with US dollar deposits in the hours when New York was off to dinner and London slept, the game is different. In fintech, Mr Menon isn't just looking to fill a gap.
He wants Singapore to shine a light from which even the West can draw regulatory comfort.
Monetary czars are like parents. A good many outlaw parties because there would be drink and drugs - or their central-banking equivalent, cryptocurrencies. Enlightened new-age guardians like Mr Menon, however, are creating safe spaces for experimentation in "regulatory sandboxes".
ON THE ALERT
I weigh up more disaster scenarios than you can think of.
MR RAVI MENON, on the worry about abuse while creating safe spaces for experimentation.
Do they worry about abuse?
"I weigh up more disaster scenarios than you can think of," Mr Menon told Swiss daily Neue Zeurcher Zeitung.
Yet, he's fine not regulating bitcoin, so long as intermediaries dealing in it follow anti-money-laundering rules.
Whether it's disrupting heavily paper-based trade finance with blockchain, or slashing know-your-customer costs by opening bank accounts with a shared utility, Mr Menon gives fintech initiatives a stamp of respectability.
The 1MDB scam, in which billions were allegedly stolen from a Malaysian sovereign wealth fund, was a blow to the integrity of the Singapore banking system, where some of the money was parked.
But Mr Menon didn't let a good scandal go to waste.
Not only did he send two Swiss banks packing, he's now working on a data-analytics system to scour through the 3,000 suspicious transaction reports financial institutions file each month, flagging money-laundering or terrorist-financing risks.
In Hong Kong, regulation is split between the Hong Kong Monetary Authority, the Insurance Authority, the Mandatory Provident Fund Schemes Authority, and the Securities and Futures Commission. In Singapore, MAS is the single, all-powerful watchdog.
That allows Mr Menon to juggle many balls at once: He can promise banks that he'll never ask them for the same data twice; police circular trading in stock markets; ready specifications for a common QR code; and come up with a law that would force all large e-money players to protect the account balances of Singapore residents but leave smaller firms free to grow.
Last month, Singapore's second fintech festival saw 25,000 participants from 100 countries. Fintech and regulatory tech start-ups are mushrooming, finally giving the city-state a way out of its dreary dependence on multinationals and a smattering of world-class government-linked companies.
Fintech is more of a global ambition, though. If Mr Menon's gambit works, Singapore will stake a claim to be one of the alternatives to post-Brexit London.
But the correction in fintech hype that Mr Menon sees coming sooner or later must not sweep away the good with the bad, he told Bloomberg television last month.
• This column does not necessarily reflect the opinion of Bloomberg and its owners.
A version of this article appeared in the print edition of The Straits Times on December 30, 2017, with the headline 'Architect of a 'most audacious makeover''. Print Edition | Subscribe
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