Along with boosting liquidity, there is a need for a base layer foundational digital infrastructure that can meet the needs of regulated financial institutions, said Leong Sing Chiong, deputy managing director for Markets & Development at the Monetary Authority of Singapore, in a recent speech.
Last year, MAS launched the Global Layer One (GL1) initiative to foster the development of a public permissioned foundational digital infrastructure, upon which commercial networks could be deployed. Since the launch, MAS and a core group of global banks, namely BNY, Citi, J.P. Morgan, MUFG and Societe Generale-FORGE, have been leading efforts to define the business, governance, risk, legal and technology requirements of the GL1 Platform. These 5 banks represent participation from the G3 currencies, for a start.
Beyond global banks, foundational digital infrastructures can also support today’s global market infrastructure players, including global exchanges and custodians, on which high volumes of financial assets are traded, settled and custodized. This will enable a larger universe of tokenized assets to be traded seamlessly across borders.
“In this regard, I would like to welcome Euroclear and HSBC as new industry participants to the GL1 initiative.
With these new participants, GL1 will also expand its scope of work in the coming year,” he said in the speech.
This expansion will cover the development of platform requirements to deploy financial applications such as cross-border payments and collateral management. It will also design an appropriate business model to ensure that the GL1 platform can be financially sustainable.
In addition, there will be a focus on ecosystem development, which includes the development of risk and governance principles, and settlement arrangements on market infrastructures, as well as asset lifecycle specifications and programmable compliance templates for tokenized assets.