- L Misthos and M Bacina
JP Morgan completes on-chain pilot of government bond transfers
The Monetary Authority of Singapore (MAS) has announced the first industry pilot under Project Guardian, an MAS initiative which seeks to explore the economic potential and value-adding use cases of digital assets and asset tokenisation. The pilot, which explores the potential of decentralised finance (DeFi) applications in wholesale funding markets, has completed its first live trades.
Under the first industry pilot, JP Morgan, DBS Bank and SBI Digital Asset Holdings conducted foreign exchange and government bond transactions against liquidity pools comprising of tokenised securities bonds from the Singapore Government, Japanese Government as well as the Japanese Yen and the Singapore Dollar.
A successful, cross-currency transaction involving tokenised Yen and Singapore Dollar was conducted and a simulated exercise was also conducted involving the buying and selling of tokenised government bonds.
DeFi enables financial transactions to occur instantly and between two entities, without the need for intermediaries. The pilot transaction proves cross-currency transactions can be traded, cleared and settled instantaneously, freeing up costs owed to financial intermediaries.
Sopnedu Mohanty, Chief FinTech Officer of MAS said:
The live pilots led by industry participants demonstrate that with the appropriate guardrails in place, digital assets and decentralised finance have the potential to transform capital markets.
Since the announcement of Project Guardian earlier this year, MAS has been working to be seen to be engaged with the financial industry to identify collaboration areas using digital assets in what could be a precursor of financial services businesses acting as a layer between customers and Defi, potentially bringing the benefits of DeFi and the safety of TradFi rails.