Forward the Original Title ‘新加坡金管局《全球Layer 1 -金融网络的基础层》白皮书’

In June 2024, the Monetary Authority of Singapore (MAS) officially released the white paper “Global Layer 1: Foundation Layer for Financial Networks”, marking that Singapore will establish an important “central bank blockchain”. At the same time, the “Money Bridge Blockchain mBridge” jointly created by the Bank for International Settlements, the People’s Bank of China and the Hong Kong Monetary Authority has also entered the MVP stage and openly invited international cooperation.

Prior to this, the Bank for International Settlements (BIS) published an article “Financial Internet (Finternet)” in April 2024, outlining the future blueprint and vision of Tokenization and Unified Ledger, expressing the central bank’s attitude towards this change.

In October 2023, I published a 30,000-word comprehensive report titled “Future Blueprint for RWA Asset Tokenization: A Panoramic Review of Underlying Logic and Pathways to Large-Scale Implementation,” which thoroughly explored the underlying logic of tokenization and its pathways to large-scale application. Those who have read it carefully should know that it was not a research report on RWA projects in the crypto market but a deep dive into future development directions from a practical implementation perspective.

In that article, I expressed the view that in the future, most real-world assets will be tokenized on permissioned chains within regulatory compliance frameworks, forming a multi-chain interoperable landscape across different regulatory jurisdictions. In this landscape, legal tender on the chain, such as CBDCs and tokenized bank deposits, will become the primary currencies in use.

From MAS’s white paper, it appears that the industry is developing in line with my predictions. Based on this, I would like to share some of my perspectives on the future evolution of the industry:

1. Despite the trillion-dollar scale of RWAs, the RWA track will gradually evolve into a game for the power holders and traditional financial institutions, leaving few opportunities for pure Web3 players. The core elements are compliance and assets, with compliance set by the power holders and assets held by capitalists and financial institutions. Technology is not the moat in this track, so entrepreneurs in the RWA space seem to have only two paths to take: “fully compliant” or “completely non-compliant.”

2. Fields such as cross-border payments, international trade, and supply chain finance, previously considered the most promising areas for blockchain improvement and application, will have significant opportunities for practical implementation amidst this wave of global public-private sector mobilization. These fields also represent markets worth hundreds of billions to trillions of dollars but are similarly tracks that rely on compliance and resources.

3. MAS’s white paper clearly states that public chains are not suitable for regulated activities or regulated financial institutions. The market currently lacks infrastructure suitable for financial institutions. So, the envisioned future where trillions of dollars of assets are on-chain may not be on a public chain. According to my understanding, some RWA investors’ concerns stem from unknown risks, such as security risks, which are almost inevitable on public chains without accountability mechanisms. Therefore, I boldly predict that public permissioned chains will experience exponential growth in the future, as clear legal supervision and accountability mechanisms will alleviate most investors’ concerns.

4. In the white paper, the native token of Global Layer 1 is the central bank digital currency (CBDC), with no mention of stablecoins. From my observations, central banks prioritize CBDCs and tokenized bank deposits, while stablecoins are not preferred due to structural flaws such as the inability to achieve “singularity” and the risk of de-pegging. However, does this mean that CBDCs will replace stablecoins in the future? Not necessarily, but it may present a scenario where “what belongs to Caesar stays with Caesar.” This is an interesting topic that I may discuss in detail in the future.

5. Chris Dixon, a partner at a16z, mentioned in his book “Read Write Own: Building the Next Era of the Internet” that the industry has two distinct cultures: “computer” and “casino,” representing different development paths. The “computer culture” represents developers, entrepreneurs, and many visionaries who can place crypto within the broader historical context of the internet and understand the long-term technological significance of blockchain. On the other hand, the “casino culture” focuses more on short-term gains and profiting from price volatility. In my opinion, as the industry develops, the benefits of wild growth will gradually diminish. The “casino” culture will always exist, but the opportunities for ordinary people will be fewer, and people will increasingly focus on the “computer” culture, truly driving technological development and creating real value.

Many people may have noticed that my update frequency has decreased, and the content is less market-related, focusing instead on central bank development trends. This is because I am currently involved in a series of pilot projects in collaboration with central banks, dedicating most of my energy to entrepreneurial activities. Therefore, in the future, I will continue to update similar content. This may not make you money directly, but it can help you understand the latest industry trends from another perspective, and I believe this content will attract many like-minded friends. Respect!

1 Introduction

The Global Layer One (GL1) initiative explores the development of a multi-purpose, shared ledger infrastructure based on Distributed Ledger Technology (DLT), envisioned to be developed by regulated financial institutions for the financial industry. The vision is for regulated financial institutions to leverage this shared ledger infrastructure across jurisdictions to deploy inherently interoperable digital asset applications, governed by common standards and technology for assets, smart contracts, and digital identities. Creating a shared ledger infrastructure would free up trapped liquidity that is fragmented across multiple venues and enable financial institutions to collaborate more effectively. Financial institutions could expand services offered to clients while reducing the cost of standing up their own infrastructure.

GL1 focuses on providing a shared ledger infrastructure for financial institutions to develop, deploy, and use applications for financial industry use cases along the value chain, such as issuance, distribution, trading and settlement, custody, asset servicing, and payments. This could enhance cross-border payments as well as the cross-border distribution and settlement of capital market instruments. Establishing a consortium of financial institutions that leverages DLT to tackle specific use cases such as cross-border payments is not a new development. The transformative potential of GL1’s unique approach is the development of a shared ledger infrastructure that could be utilized across disparate use cases, and its ability to support composable transactions involving multiple types of financial assets and applications while complying with regulatory requirements.

By tapping into the broader financial ecosystem’s capabilities, financial institutions can provide a richer and wider suite of services to end users and get to market faster. GL1’s shared ledger infrastructure would enable financial institutions to build and deploy composite applications, leveraging capabilities from other application providers. This could be in the form of institutional-grade financial protocols that model and execute foreign currency exchange and settlement programmatically. This, in turn, could improve interactions of tokenized monies and assets, enabling synchronized delivery versus payment (DvP) settlement for digital and other tokenized assets, and payment versus payment (PvP) settlement for foreign currency exchanges. This could be extended further to support delivery versus payment versus payment (DvPvP), whereby the settlement chain could be composed of a set of synchronized tokenized monies and asset transfers.

This paper introduces the GL1 initiative and discusses the role of a shared ledger infrastructure that would be compliant with applicable regulations and governed by common technological standards, principles, and practices, on which regulated financial institutions across jurisdictions could deploy tokenized assets. The participation of public and private sector stakeholders is critical to ensure that the shared ledger infrastructure is established in accordance with relevant regulatory requirements and international standards while meeting the market’s needs.

2. Background and Motivation

The legacy infrastructure underpinning global financial markets was developed decades ago, resulting in siloed databases, disparate communication protocols, and significant costs incurred from maintaining proprietary systems and bespoke integrations. While global financial markets have remained robust and resilient, the needs of the industry have grown in sophistication and scale. Incremental upgrades to existing financial infrastructures alone may not be sufficient to keep pace with the increasing complexity and rapid changes.

Consequently, financial institutions are turning to technologies such as DLT for its potential to modernize market infrastructures and deliver a more automated and cost-efficient model. Industry players have launched their own digital asset initiatives respectively, but they often select different technologies and vendors for their initiatives, limiting interoperability.

The limited interoperability between systems has resulted in market fragmentation, where liquidity is trapped across different venues due to incompatible infrastructures. Holding liquidity in different venues can increase funding and opportunity costs. Additionally, the proliferation of disparate infrastructures and the absence of globally accepted taxonomy and standards for digital assets and DLT increase the cost of adoption, as financial institutions need to invest in and support various technologies.

To enable seamless cross-border transactions and unlock the full value of DLT, regulatory-compliant infrastructures designed around openness and interoperability are required. Infrastructure providers should understand the applicable laws and regulations governing the issuance and transfer of tokenized financial assets, as well as the regulatory treatment of products created under different tokenization structures.

BIS’ recent working paper articulates the vision of the “Finternet” and the concept of Unified Ledger, reinforcing the case for tokenization and its applications such as cross-border payments and securities settlement. Open and interconnected financial ecosystems, if well managed, could improve the access and efficiency of financial services through better integration of financial processes.

Despite good progress in asset tokenization experimentations and pilots, the lack of suitable financial networks and technical infrastructures which financial institutions may use to execute digital asset transactions limits their ability to deploy tokenized assets at a commercial scale. Consequently, market participation and secondary trading opportunities in tokenized assets remain low relative to traditional markets.

The paragraphs below discuss two network models commonly adopted by financial institutions today, as well as a third model which combines the openness of Model 1 with the safeguards introduced in Model 2.

Model 1: Public Permissionless Blockchain

At present, public permissionless blockchains have attracted large groups of applications and users as they are designed to be open and accessible to all parties. In essence, they are similar to the internet, whereby public networks grow at an exponential rate because no approval is required before participating in the network. Consequently, the potential network effect of public permissionless blockchains is significant. By building on a shared and open infrastructure, developers may tap into existing capabilities without having to rebuild similar infrastructure themselves.

Public permissionless networks were not originally designed with regulated activities in mind. They are autonomous and decentralized by nature. There is no legal entity responsible for these networks, no enforceable service level agreements (SLAs) on performance and resiliency (including cyber risk mitigation), and a lack of certainty and guarantees around processing transactions.

Due to the lack of clear accountability, the anonymity of service providers, and the absence of service level agreements, these networks are not suitable for regulated financial institutions without additional safeguards and controls. Furthermore, the legal considerations and general guidelines for the use of such blockchains are not yet clear. These factors make it difficult for regulated financial institutions to use them.

Model 2: Private Permissioned Blockchain

Some financial institutions have determined that existing public permissionless blockchains do not meet their requirements. Consequently, numerous financial institutions have elected to set up independent private permissioned networks with their own ecosystems.

These private permissioned networks include technical features that enable rules, procedures, and smart contracts consistent with applicable legal and regulatory frameworks to be operationalized. They are also designed to ensure the resiliency of the network against malicious behaviors.

However, the proliferation of private and permissioned networks that are not interoperable with each other could lead to greater fragmentation of liquidity in the wholesale funding markets in the long run. If unaddressed, fragmentation would reduce the network benefits of financial markets and could create frictions for market participants, such as inaccessibility, increased liquidity requirements due to the separation of liquidity pools, and pricing arbitrage across networks.

Model 3: Public Permissioned Blockchain

Public permissioned networks are open for participation by any entity that fulfills the criteria for participation, but the type of activities that participants may conduct on the network are restricted. A public permissioned network operated by financial institutions for the financial services industry could enable the realization of benefits of open and accessible networks while minimizing the risks and concerns.

Such a network would be built on principles of openness and accessibility similar to the public internet, but with built-in safeguards for its use as a network for value exchange. For example, the network’s governing rules may restrict membership to regulated financial institutions only. Transactions may be complemented by privacy-enhancing technologies such as zero-knowledge proofs and homomorphic encryption. While public and permissioned networks as a concept are not new, there is no precedent of such networks offered by regulated financial institutions at scale.

The GL1 initiative would explore and consider the various network models, including the concept of public permissioned infrastructures in the context of relevant regulatory requirements. For example, regulated financial institutions may operate GL1’s nodes and GL1 platform participants would be subject to Know Your Customer (KYC) checks. The subsequent sections describe how GL1 could be operationalized in practice.

The GL1 initiative aims to foster the development of a shared layer infrastructure for hosting tokenized financial assets and financial applications along the financial value chain.

GL1’s infrastructure would be asset-agnostic; it would support tokenized assets and tokenized money issued by network users (e.g., regulated financial institutions) from various jurisdictions in different currency denominations. This could streamline processing, support automated instantaneous cross-border fund transfers, and facilitate simultaneous Foreign Exchange (FX) swap and securities settlement based on the fulfillment of predefined conditions.

The infrastructure would be developed by financial institutions for the financial services industry and would serve as a platform that provides for

1. cross-application synchronization
2. composability
3. privacy
4. innate application compatibility with assets already tokenized and/or issued onto the infrastructure

GL1 operating companies would serve as technology vendors and common infrastructure providers operating across markets and jurisdictions. To foster the development of an ecosystem of solutions, GL1 would also support regulated financial institutions to build, operate, and deploy applications on a common digital infrastructure covering:

• Trade lifecycle (primary issuance, trading, settlement, payments, collateral management, corporate actions, etc.)
• Different asset type issuances and transactions (e.g., cash, securities, alternative assets)

3. Key Objectives

To achieve the vision of creating more efficient clearing and settlement solutions across the financial services industry and unlock new business models through programmability and composability features, the GL1 initiative would focus on: a) Supporting the creation of multi-purpose networks. b) Enabling applications ranging from payments and capital raising to secondary trading to be deployed. c) Providing a foundational infrastructure for hosting and executing transactions involving tokenized assets, which are digital representations of value or rights that may be transferred and stored electronically. Tokenized assets may be across asset classes such as equities, fixed income, fund shares, etc., or monies (e.g., commercial bank money, central bank money). d) Encouraging the development and establishment of internationally accepted common principles, policies, and standards to ensure that the tokenized assets and applications developed on and for GL1 are interoperable internationally and across networks.

3.1 Design Principles

To achieve GL1’s objective of serving the needs of the financial industry, GL1’s foundational digital infrastructure would be developed according to a set of principles such as:

• Open and standards-based – Technology specifications would be made public and open, allowing members to build and deploy applications with ease. Industry standards and open-source protocols, for payment messages and tokens, may be used where appropriate. Where existing standards have not been developed or are inadequate, appropriate efforts would be made to ensure that designs are flexible and could be proposed or incorporated into future standards.
• Compliant with applicable regulations and accessible to regulators – GL1 platform would comply with applicable legal and regulatory requirements. Jurisdiction-specific policy controls should be developed at the applications layer and would not be natively built into GL1 platform. The legal and regulatory requirements that apply to a member or end-user may depend on an analysis of the commercial application, service, and location of the member or end-user.
• Well-governed – Appropriate governance, operating arrangements, membership agreements, and rules would be clear and transparent to ensure clear lines of responsibility and accountability.
• Neutral – To be designed to prevent concentration or aggregation of control within any single entity or group of related entities, and within geographical regions. Key operating decisions, including technology selection, would be proposed on (among other factors) technical merits, and evaluated by members.
• Commercially fair – Financial institutions should be able to compete fairly on the GL1 platform. A GL1 operating company will not undertake decisions that are intended to unfairly benefit a financial institution over other financial institutions.
• Accessible, both functionally and economically – Financial institutions that meet the membership criteria would be eligible to participate. Membership criteria, operating costs, and fees would be designed to promote the integrity, stability, and sustainability of the network.
• Financially Self-Sustaining – The GL1 platform may be operated as an industry utility. Revenues, consisting of subscription and transaction fees, would be used for operational costs and reinvestment (such as enhancements and technology research and development) to ensure the continued sustainability of GL1.

3.2 Architecture Overview

It is envisaged that the architecture of GL1 can be seen as the foundational layer in a four-layer conceptual model for digital asset platforms. This four-layer model was first introduced in the Monetary Authority of Singapore (MAS) Project Guardian - Open and Interoperable Networks paper and the IMF’s working paper, ASAP: A Conceptual Model for Digital Asset Platforms.

While still under consideration, the intended interactions of GL1 with other component layers can be described as follows:

1. Access Layer: The access layer refers to how end users would engage with the range of digital services built around the GL1 platform. Each service provider would be responsible for: a) providing their own wallet capabilities, aligned with the GL1 standards; b) performing KYC checks on their respective clients; c) onboarding, entitling, and offboarding their direct clients; and d) servicing their own clients. It is assumed that non-designated financial institutions would be able to access GL1’s services, but they would be required to be onboarded through designated financial institutions first.
2. Service Layer: Regulated financial institutions and trusted third parties who meet the participation criteria should be able to build and deploy application services such as interbank transfers and collateral management on the GL1 platform. Participating financial institutions would be required to conform to GL1-defined settlement functionality standards for: Free of Payment (FoP), PvP, DvP, and Delivery vs Delivery (DvD). Service providers would also be able to develop their own smart contract logic not included in the default software libraries provided by GL1.
3. Asset Layer: The asset layer would support both the native issuance of cash, securities, and other assets, as well as the tokenization of existing physical or analog assets. Supported asset types could include cash and cash equivalents, equities, fixed income, commodities, derivatives, alternative assets, fund shares, letters of credit, bills of exchange, asset-referenced tokens, and other tokens. Assets on GL1 would be deployed in the form of tokens and should be designed to be technologically interoperable across multiple GL1 applications and service providers.
4. Platform Layer (Global Layer One): GL1 would provide the infrastructure components for the platform layer, envisioned to encompass the blockchain infrastructure that includes the ledger and consensus mechanism, libraries and templates, data standards, and platform-wide services. The infrastructure used for record-keeping would be distinct from the application layers, ensuring that assets on the GL1 platform are compatible with multiple applications, even if offered by different institutions. The GL1 platform would include a standardized protocol for consensus and synchronization mechanisms, which would enable asset transfer and cross-app communication. The platform would also ensure privacy, permissioning, and data segregation from other applications and participants.

Under GL1, entities who serve as validators and ensure the integrity of the transactions that are recorded would be required to adhere to the financial sector’s technology risk management controls, including business continuity plans and cybersecurity protection procedures. For their effort, the validators may be remunerated either upfront in terms of transaction fees or on a deferred recurring basis based on subscription fees.

To ensure compatibility with other layers in the stack, the GL1 platform would comply with a set of defined data and operating standards (asset, token, wallet, etc.) and include core functionality, common libraries, and business logic (access, smart contracts, workflows) that could be leveraged as an optional ‘starter kit’.

4. Potential Uses of GL1

GL1 would be designed to support multiple types of use cases and is asset-agnostic. It would support all regulated financial assets, tokenized central bank money, and commercial bank money on a shared ledger infrastructure. Participating central banks may also issue central bank digital currency (CBDC) as a common settlement asset.

In the case of GL1, any financial institution that meets the minimal suitability criteria and passes the due diligence process may participate and use GL1 services without approval from a central governing body. However, only permissioned parties would be able to build and deploy commercial applications on the GL1 platform, adhering to the GL1 data and security standards. The admissible activities performed by financial institutions would be proportional to their risk profiles and ability to mitigate associated risks. \

The initial use cases identified include cross-border payments and cross-border distribution and settlement of capital market instruments on digital asset networks. Table 3 provides examples of where GL1 may potentially be used.

The examples included in this paper are meant to be illustrative and should not be regarded as a formal opinion that applies to all usage of the GL1 platform.

Value Proposition of GL1

By integrating digital asset applications and regulated financial institution participants onto a shared ledger infrastructure, it is anticipated that the financial industry could harness the advantages of digital assets and potentially expedite the modernization of outdated market infrastructure. Table 4 outlines some of the potential value propositions of GL1.

5. Operating Models

In practice, multiple financial applications and networks could be established using the GL1 platform. A financial network is defined here as a consortium of financial institutions that agree to transact with each other using a common set of commercial arrangements and governance rules, which set out the responsibilities and obligations of each transacting party.

Financial networks could be organized around specific use cases. For example, a financial network may consist of applications focused on cross-border payments. Meanwhile, other financial networks may focus on use cases such as cash and securities settlement.

Financial networks could also feature different types of tokenized assets. Some financial networks may focus on the use of wholesale CBDC while others explore the use of central bank money and commercial bank money on a shared ledger. Financial networks could also span multiple use cases and jurisdictions. For instance, MAS’ Project Guardian Wholesale Network would include applications that support the exchange of foreign exchange, fixed income, and asset and wealth management tokenized products.

While each of these financial networks is or would be governed independently and has different characteristics, the potential to expand the reach of individual financial networks may be a strong motivation for them to select a common foundational infrastructure. By using the same shared ledger infrastructure, tokenised assets could be transferred between different financial networks and new applications could be composed by building upon applications originating from multiple financial networks.

In instances where financial institutions cannot transact on networks based on a shared ledger infrastructure, financial networks using different ledger technologies could instead be interlinked. The merits and drawbacks of interlinking networks are covered in the MAS’ Project Guardian - Interlinking Networks Technical Whitepaper. Further considerations for scaling networks are discussed extensively in Project Guardian’s Enabling Open and Interoperable Networks paper.

As a platform for regulated financial services, some activities on the GL1 platform may be restricted and permissible only by designated service providers. The respective operators are expected to define the rulebooks and dictate the types of permissible activities. For instance, all participants may be able to initiate transactions, but only designated financial institutions may be permitted to deploy smart contracts. Additional controls may be defined at the respective network and application levels, whereby access to specific functions may be limited to selected parties who have gone through requisite screening or accreditation processes.

Settlement Arrangements The GL1 platform could support Financial Market Infrastructure (FMI) operators’ role in providing the clearing and settlement of payments, securities, and other financial transactions. GL1 operating companies standing up the GL1 platform may serve as technology infrastructure providers to FMI operators. FMIs may still play key roles in the value chain, but there could be a potential reorganization of the functions traditionally performed by a specific type of FMI or critical service providers (CSPs).

For example, under current arrangements, the trade execution, clearing, and settlement functions are performed by discrete systems operated by different parties. When payment is made via a separate system, the ownership of the security is transferred, and the records with a central security depository (CSD) are updated.

With GL1, this coordination could be automated through the use of smart contracts. Under the new arrangements, both cash and securities transactions would be hosted and executed on the same shared ledger infrastructure. This means that cash and securities could be exchanged simultaneously, ensuring that either both cash and securities legs of a transaction succeed, or both fail. This arrangement would minimize the system impact if or when a counterparty defaults.

Settlement Finality A key GL1 design requirement would be the ability for the platform to support settlement finality, where it would be possible to clearly define when settlement becomes irrevocable and unconditional. This is non-trivial in distributed networks, where multiple validating nodes validate transactions and update records simultaneously. To ensure alignment between the operational stage of the ledger and when transfers are regarded as having settlement finality, selecting the appropriate algorithm to achieve consensus on ledger state is an important design decision.

In the case of GL1, it is assumed that a deterministic consensus algorithm would be required to support settlement finality. For example, it would be possible for an FMI operator to define that settlement is considered final and irrevocable once a predetermined number of validating nodes, operated by designated financial institutions, have achieved consensus on the state of the ledger. For completeness, FMI operators who utilize the GL1 platform should be aware of the applicable regulatory regimes that apply to settlement finality.

Organisation and Regulatory Oversight By design, GL1 operating companies may operate across markets and jurisdictions where participating financial institutions operate. Depending on the specific arrangements between GL1 operating companies and participating financial institutions, and subject to commercial and legal analysis, GL1’s infrastructure and its operating companies may be regarded as an FMI and/or a critical service provider in certain jurisdictions in which they operate.

Operating companies and participating financial institutions would need to consider and manage potential risk factors. These include credit and liquidity risks, as well as operational risks, such as the impact of a loss or delay in accessing the GL1 platform. Appropriate measures should be taken to mitigate the systemic impact of an outage. Environmental, social, and governance risks would also need to be considered.

Depending on organizational form and settlement arrangements, financial institutions utilizing the GL1 platform could also be subject to differing applicable licensing and regulatory requirements. Further commercial, legal, and governance analysis would be required to determine the responsibility and accountability of GL1 operating companies in the context of settlement arrangements with FMI operators in participating jurisdictions.

In this regard, GL1 operating companies would work with relevant stakeholders (including oversight authorities) in the relevant jurisdictions to ensure that the rule of law is preserved concerning GL1’s infrastructure.

1.Future Work - Since its inception in November 2023, MAS and participating financial institutions have been engaged in discourse and generation of insights and ideas in relation to the GL1 shared ledger infrastructure. Among the themes discussed, the participating financial institutions have considered:

Potential business use cases to be deployed on the GL1 platform such as domestic and cross-border payments, primary issuance of securities and other financial instruments, collateral management, and securities settlement.

Alignment on the governance model of GL1, where there is a need for distinct legal entities in the form of operating companies running GL1 and a non-profit organization focused on governing principles, standards, and best practices.

Preliminary assessment of the policy, risk, and legal considerations for providing services.

Preliminary assessment and recommendation of applicable existing DLT technology, in consideration of potential business requirements, to develop GL1.

In the next phase, GL1 is taking a two-prong approach to foster its development. GL1 would explore the establishment of a non-profit organization to develop common principles, policies, and standards for operating GL1. This would complement the potential future establishment of independent operating companies that would build and deploy the GL1 infrastructure.

The development of the governance and operating model may include consideration of factors such as the type and distribution of members, the target operating model, expected operational costs, proposed fee structures, estimated revenues, and break-even point for the entity to be cost-neutral. It may also expand on the preliminary assessment of potential solution options and technical design considerations for realizing GL1.

It is expected that existing distributed ledger technologies would be used, with further potential enhancements undertaken to support GL1’s specific needs.

2.Conclusion - GL1 is expected to be a multi-year initiative to establish the foundational digital infrastructure that could shape the future of financial networks. When this vision is realized, it could fundamentally transform an asset lifecycle and how capital markets are conducted. For this potential to be realized, it would require a scale of multilateral cooperations across jurisdictions from both the private and public sectors that is unprecedented since the advent of the internet.

The power of bringing together a network of global banks, public sector authorities, and international organizations is clear: The initiative welcomes contributions from the international community to advance the development of GL1 as a foundational digital infrastructure that supports the transformation of the financial industry.

White Paper https://www.mas.gov.sg/publications/monographs-or-information-paper/2024/gl1-whitepaper

Glossary

Central Counterparty (CCP) means a legal person that interposes itself between the counterparties to contracts traded on one or more financial markets, becoming the buyer for every seller and the seller for every buyer.

Central Securities Depository (CSD) means a legal person that operates a securities settlement system (settlement service), and which provides the initial recording of securities in a book-entry system (notary service) and/or provides and maintains securities accounts at the top tier level (central maintenance service).

Custody refers to the service of safekeeping and administration of financial instruments for the account of clients, including custodian and related services such as cash/collateral management.

Delivery-versus-Delivery (DvD) is a securities settlement mechanism that links two securities transfers in such a way as to ensure that delivery of one security occurs if and only if the corresponding delivery of the other security occurs.

Delivery-versus-Payment (DvP) is a securities settlement mechanism which links a transfer of securities with a transfer of cash in such a way that the delivery of securities occurs if, and only if, the corresponding transfer of cash occurs and vice versa.

Digital Assets are any digital representation of value or rights which may be registered, issued, transferred, stored electronically using DLT.

Distributed Ledger Technology (DLT) refers to the protocols and supporting infrastructure that allow computers in different locations to propose and validate transactions and update records in a synchronized manner across a network.

Financial Market Infrastructure (FMI) is a multilateral system among participating institutions, including the operator of the system, used for the purposes of clearing, settling or recording payments, securities, derivatives, or other financial transactions. Typical examples include: Central Security Depository (CSD), Central Clearing Party (CCP), Securities Settlement System (SSS), Trade Repository (TR).

Financial Networks refer to business networks made up of a consortium of financial institutions that agrees to transact with each other based on a common set of commercial arrangements and governance rules.

Free-of-Payment (FoP) is a transfer of securities without a corresponding transfer of funds.

Global Layer One (GL1) refers to the initiative to establish a foundational digital infrastructure for tokenized assets.

GL1 Platform refers to the shared ledger infrastructure provisioned by GL1 Operating Companies for hosting and executing tokenized financial assets and transactions.

GL1 Operating Company refers to the industry utility that would be operated by a consortium of financial institutions for the financial industry.

Securities Settlement System means a formal arrangement between a plurality of participants whose activity consists of the execution of transfer orders.

Security Token means a security which is issued, recorded, transferred, and stored using a DLT.

Settlement refers to the completion of a securities transaction where it is concluded with the aim of discharging the obligations of the parties to that transaction through the transfer of cash or securities, or both.

Smart Contracts means a computer program deployed on a distributed ledger in which some or all of the contractual obligations are recorded, replicated or performed automatically.

Payment-versus-Payment (PvP) refers to the settlement mechanism that ensures that the final transfer of a payment in one currency occurs if and only if the final transfer of a payment in another currency takes place.

Validators refer to nodes on a distributed ledger or blockchain network that are responsible for verifying transactions on the network.

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