Singapore’s financial sector is set for a major overhaul following the unveiling of Project Guardian. This program is set to integrate Blockchain into the traditional finance industry to support Decentralized Finance (DeFi) and asset tokenization protocols.
According to a leading global financial news outlet, Project Guardian is a collaboration of the Monetary Authority of Singapore (MAS) on the one hand and DBS, Marketnode Pte, and JP Morgan on the other hand. The two financial institutions are the leading financial players in the wealthy city-state.
Building a Resilient Digital Economy
Project Guardian, which is now in its pilot stage, is expected to catapult Singapore’s financial system into global prominence through exploring and adopting the futuristic DeFi and asset tokenization in the financial space.
According to Sopnendu Mohanty, MAS chief fintech officer, the goal is to build a resilient digital economy. The pilot scheme will entail experimentation with the Blockchain in the financial space to assess the benefits of DeFi and tokenization.
The project will enable the MAS, DPS, JP Morgan Chase, and Marketnode Pte to learn more about the dynamic digital assets to enact policies that respond to Crypto risks and encourage the growth of digital assets.
Project Guardian Will Explore DeFi Opportunities in the Wholesale Funding Markets
The wholesale funding market entails the creation of capital from deposits and liabilities of major institutions such as banks, unit trusts, hedge funds, pension funds, and insurance funds. It is large-scale and deemed one of the best ways to create capital for large-scale lending. Wholesale funding relies on long-term finances, which wholesale creditors can better manage to cushion them from liquidity risks pertaining to short-term finances.
Project Guardian aims to test the effectiveness of DeFi and tokenization in applying wholesale funding. The result will highlight the strategies and ways of operationalization of the solution in other areas of finance where DeFi and tokenization can improve efficiency.
DeFi and Tokenization Are the Future of Finance
DeFi revolutionizes the financial space in the following ways: Replacing people with smart contracts, adopting codes to edge out paperwork, and using code protocols to enforce rules and compliance. Hence, the financial industry is adopting DeFi and its native tokens to improve services and stay competitive in the crowded financial space.
MAS will be one of the many financial services regulators liaising with local financial stakeholders to roll out Blockchain financial solutions. The UAE Financial Services Regulatory Authority (FSRA) released the ‘Discussion Paper No. 1 of 2022’. It is an invitation to stakeholders to participate in the policy-making process to support and regulate DeFi and Digital Assets.