On Tuesday, Singapore’s Monetary Authority (MAS) and the central bank announced that they’ve partnered with the likes of JP Morgan and DBS from the financial services industry to set off its Project Guardian. As per the central bank’s definition of Project Guardian, the project is a “collaborative initiative” with the private financial services industry to explore the “value-adding use cases of asset tokenisation” and its benefits to the economy.
The commencement of the project was done by Heng Swee Keat, Singapore’s deputy prime minister and coordinating minister for economic policies at the Asia Tech x Singapore Summit. He said that the first industry-wide pilot of Project Guardian shall explore the potential DeFi applications in “wholesale funding markets.”
The pilot, led by DBS Bank Ltd., JP Morgan, and Marketnode, involves the creation of a permissioned liquidity pool comprising tokenized bonds and deposits.
As per MAS, the pilot will be aimed at carrying out secured lending and borrowing on a public blockchain-based network. The authority said that these transactions will be conducted through the execution of smart contracts.
The chief fintech officer at the central bank (Sopnendu Mohanty) says that MAS is closely scrutinizing growth and innovation in the digital asset industry and is working on identifying potential risks and opportunities to “consumers, investors, and the financial system at large.”
Sopnendu said that the data acquired from Project Guardian will help in policy framing. The top monetary institutions in Singapore aim to frame a regulatory framework which would allow the local industry to harness the benefits of defi while mitigating the risks it carries.