This item originally ran on finews.asia.
The Monetary Authority of Singapore (MAS) has launched a program to pilot use cases for digital assets.
Singapore’s central bank, called the Monetary Authority of Singapore (MAS), launched Project Guardian Tuesday to explore use cases for asset tokenisation, particularly in decentralised finance (DeFi). Smart contracts can be used in DeFi for transactions including lending and trading on a blockchain without the use of intermediaries, MAS said in a statement on its website.
Heng Swee Keat, deputy prime minister and coordinating minister for economic policies, announced the program at the Asia Tech x Singapore Summit. The program will develop and pilot use cases in four main areas: Using public blockchains to build open networks for digital asset trading; setting up trusted environments for executing DeFi protocols by using regulated financial institutions to verify credentials; examine the use of tokenised digital deposits issued by deposit-taking institutions; and creating institutional-grade DeFi protocols.
Sopnendu Mohanty, chief fintech officer at MAS, said the central bank was closely monitoring the opportunities and risks of new technologies.
“Through practical experimentation with the financial industry and the broader ecosystem, we seek to sharpen our understanding in this rapidly transforming digital assets ecosystem. The learnings from Project Guardian will serve to inform policy markets on the regulatory guardrails that are needed to harness the benefits of DeFi, while mitigating its risks,” Mohanty said in the statement.
The first pilot under Project Guardian will look at DeFi applications in wholesale funding markets, in a project led by DBS Bank, J.P. Morgan and Marketnode, MAS said. The project will look to create a permissioned liquidity pool of tokenised bonds and deposits and carry out secured borrowing and lending on a public blockchain network, the statement said.
Han Kwee Juan, head of group planning and strategy at DBS, said the pilot was “pivotal” as it would further efforts to scale institutional financial applications on blockchain, while keeping within the rails of existing financial markets.
“We believe that these early explorations in DeFi solutions will ensure the competitiveness and relevance of Singapore as a cutting edge financial centre,” Han said in the statement.