The Monetary Authority of Singapore (MAS), Bank Negara Malaysia (BNM) and the Bank of Thailand (BOT) are advancing cross-border digital money settlement through the BLOOM (Borderless, Liquid, Open, Online, Multi-currency) initiative.
The move could create new opportunities for Asia-Pacific chief financial officers to improve treasury efficiency, manage liquidity and streamline international payments.
By developing common approaches for using tokenised deposits and regulated stablecoins across institutions and jurisdictions, the initiative aims to improve interoperability and reduce the need for financial institutions to establish separate arrangements with individual counterparties and markets.
For regional businesses, these developments could eventually help lower payment implementation costs, improve settlement efficiency and support working-capital management across multiple markets.
The initiative seeks to deepen engagement between policymakers and the industry on settlement infrastructure and frameworks that promote interoperability for cross-border digital money transactions, which will include how relevant international standards and jurisdiction-specific supervisory expectations can be applied for such transactions, while allowing for differences in local requirements.
According to a news release, participants will focus on three areas to support the use of digital money across jurisdictions:
a. Acceptance and settlement across jurisdictions. This examines how financial institutions accept different forms of digital money for cross-border transactions, how counterparties contract with one another, and how transactions are ultimately settled across institutions and markets in different jurisdictions.
b. Interoperability across digital money arrangements. This focuses on how different digital money arrangements can operate across networks, infrastructures and borders, including the technical and operational approaches needed to enable interoperability between systems.
c. Programmable controls. This includes safeguards such as identity verification, sanctions screening and transaction controls in digital money transactions.
Why this matters to CFOs
- Working capital: Potentially faster settlement could help businesses access funds sooner and improve cash-flow visibility.
- Treasury efficiency: More interoperable payment arrangements could simplify liquidity management across regional subsidiaries.
- Cost management: Common frameworks could reduce the cost and complexity of establishing cross-border payment arrangements.
- Risk and compliance: Identity verification, sanctions screening and transaction controls remain essential as businesses adopt digital money.
