Switzerland and Singapore: A strong partnership in the digital financial sector

Andrea Weber: The potential of digitalization in the financial sector is huge. It allows organizations to increase efficiency, effectiveness and transparency, cut costs, reduce information asymmetries, and attract new partners and customers. But there are also risks: Financial centers are an attractive target for cyber attacks. It is therefore important to effectively protect the infrastructure in the financial sector and invest insecurity. It is also crucial that all parties involved work closely together and exchange information on a regular basis. In a digital world, data protection also presents new challenges. It is important to make the best possible use of the available data, while preventing sensitive information from falling into the wrong hands. It is essential that customers trust the system. Finally, it is also important to keep an eye on potential risks of money laundering and terrorist financing in connection with technologies such as blockchain. It is important that these risks are duly taken into account in the relevant measures. Highly-trained specialists are needed to effectively counter the risks that digitalization entails for the financial sector. There is strong demand for such experts. Switzerland can build on its excellent education system and train new talent. At the same time, it must ensure that it remains attractive to specialists.

Regula Kurzbein: Switzerland and Singapore engage in regular financial dialog. In this context, the competent authorities of the two countries exchange views and experiences and deepen cooperation in areas of mutual interest, including FinTech and digitalization. Between financial dialogs, meetings also take place at a technical level, where specialists discuss specific issues. This close cooperation is bearing fruit. Switzerland and Singapore jointly organize the annual Point Zero Forum in Zurich, and Switzerland is prominently represented at the Singapore FinTech Festival. These international events bring together participants from business, research and public authorities to discuss the latest innovations and developments in the financial sector – with the common goal of advancing financial ecosystems.

Andrea Weber: The two countries are also working closely together on other projects. For example, in the “Mariana” project, which focuses on cross-border trade and the processing of transactions in digital central bank currencies. Or the “Guardian” project. This is a joint initiative between policymakers and the financial industry to improve the liquidity and efficiency of the financial markets by tokenizing assets.

Regula Kurzbein: Switzerland’s financial market regulation is technology-neutral, risk-based, proportionate and principle- based. The approach can be described as thorough, but certainly not conservative. Together with the principle-based approach, technology neutrality allows for a rapid response to innovation.

Andrea Weber: Switzerland was also one of the first jurisdictions to promote innovation in banking regulation (FinTech license) and introduce a license-free area (regulatory sandbox). The rapid adoption of the federal act to adapt federal law to developments in the blockchain sector was also a pioneering achievement in Switzerland. In addition, Switzerland conducts thorough checks to ensure that existing financial market legislation is compatible with new, innovative business models. The Swiss approach gives the private sector the space to innovate. The role of the regulator is to ensure optimal framework conditions, while the supervisory authority is responsible for identifying and monitoring risks. In Switzerland, we pursue a market-based approach and rely less on state-subsidized programs. Singapore is very open to international cooperation and partnerships in the financial sector and also promotes innovation with targeted projects and investments.

Regula Kurzbein: Singapore’s approach is efficient and effective. The responsible authority may be able to coordinate more easily and make quick decisions when needed, as it has to consult fewer stakeholders. On the other hand, a broad-based measure that allows the various stakeholders to express their views is more likely to be better understood, accepted and implemented.

Regula Kurzbein: As previously mentioned, the authorities in Switzerland and Singapore define their role somewhat differently. But that is of secondary importance. What is crucial is that Switzerland and Singapore have established financial centers with excellent reputations. Both countries have an interest in ensuring that their financial centers are well-regulated and supervised in order to maintain their reputation and strengthen their competitiveness and future viability. They are pursuing the same goal and, as we have seen, are cooperating in a number of areas.

Regula Kurzbein: The Asian market is growing and appeals to investors. The financial centers of Singapore and Hong Kong are at the heart of this development. They have more direct market access in Asia and are very familiar with the culturally influenced wishes and sensitivities of customers from the region. They also benefit from government incentive programs, innovation funding and attractive framework conditions in their countries. Switzerland, too, has numerous advantages. It owes its excellent global reputation in asset management in part to the political and economic stability and currency security offered by the Swiss franc. Customers appreciate the high quality and expertise in asset management, which enables individual, customized services. Switzerland also has high data protection standards and is a leader in implementing operational standards relating to the environment, social issues and corporate governance. Another reason Switzerland is attractive is that it has a transparent and efficient legal structure despite strict regulation. A strong financial center is crucial for the Swiss economy and its international competitiveness. Switzerland therefore has a fundamental interest in remaining one of the world’s leading, modern and globally active financial centers in the future – supported and accompanied by a solid, dynamic financial market and economic policy.