DBS Bank, JPMorgan, and SBI Digital Asset Holdings have successfully completed the first pilot transactions on Project Guardian, an initiative inspired by the Monetary Authority of Singapore that investigates potential decentralized finance (DeFi) applications within wholesale funding markets.
DeFi facilitates direct financial transactions among entities through smart contracts, eliminating the need for financial intermediaries. Project Guardian focuses on developing open interoperable networks, trust anchors, asset tokenization, and institutional-grade DeFi protocols.
During the pilot, the three banks executed foreign exchange and government bond transactions using liquidity pools made up of tokenized Singapore Government Securities Bonds, Japanese Government Bonds, Japanese Yen (JPY), and Singapore Dollar (SGD). A live cross-currency transaction utilizing tokenized JPY and SGD deposits was conducted, alongside a simulated test of buying and selling tokenized government bonds.
The Monetary Authority of Singapore (MAS) states that these pilots showcase the ability for institutions to trade, clear, and settle transactions instantaneously among themselves, without relying on clearing and settlement intermediaries.
Looking ahead, MAS plans to launch two new industry pilots focusing on trade finance with Standard Chartered and wealth management with HSBC and UOB. Sopnendu Mohanty, chief fintech officer at MAS, noted that these live pilots, led by industry participants, demonstrate that with the right safeguards, digital assets and decentralized finance could revolutionize capital markets, marking a significant step toward creating more efficient and integrated global financial networks.