“You Can’t Run An Ecosystem With Pure Policy”: MAS CFO Says Regulators Need To Understand Tech

Over the past decade, Singapore has earned its reputation as a fintech hub. Through the collaborative efforts of regulators and industry, the city-state has cultivated a balance between innovation and safety — ensuring that consumers are protected as they enjoy the benefits of emerging technologies.

This is a fine line to balance, one which requires continuous effort. As new innovations — be it blockchain or AI — come to light, they bring along threats which must be addressed as they arise.

For example, the crypto market has undergone a number of downturns, most recently due to the collapse of companies including FTX. Such events reveal institutional flaws which must be resolved before the industry can move forward. It’s up to regulators to introduce policies that can restore confidence and prevent such events from occurring again.

To do so, there’s a need for active involvement in the industry. Regulators must understand the technology they’re dealing with in order to police it in an efficient manner.

While speaking at a panel during Dubai Fintech Summit 2023, Monetary Authority of Singapore’s (MAS) Chief Fintech Officer Sopnendu Mohanty stressed, “You can’t run an ecosystem with pure policy. [Regulators] have to get their hands dirty in the tech space.”

Mohanty went on to speak about three key strategies which are essential for any country looking to position itself as a fintech hub, and his insights shed light into MAS’ approach to policymaking and regulating emerging technologies.

Driving public-private partnerships

The first strategy emphasises the need for the public and private sector to work together on key industry projects. When it comes to use cases which could change the future of finance, everyone should be involved.

“As a regulator, you can’t leave tech to the industry itself,” Mohanty explains. If private companies are left to innovate on their own, their lack of guardrails can often spell trouble. As seen with crypto, technology can evolve at a rapid pace and often without the appropriate risk considerations.

When regulators step in too late, they’re left playing catch-up. As such, they’re forced to curb innovation without properly understanding it, which can do more harm than good.

It’s important that regulators and the industry come together and create public-private projects. [This] allows the industry to start believing that certain technologies will be accepted by both regulators and customers.

We are the first central banker to publish code in GitHub in the public space. Imagine a central banker putting up code for the industry to engage — that sends a strong signal that you are intending to make a better system.

– Sopnendu Mohanty, Chief Fintech Officer, MAS

Regulatory involvement can be a sign that a technology is safe to use, and public-private partnerships can help establish trust and drive consumer adoption for emerging technologies.