The largest lender in Southeast Asia, DBS Bank, based in Singapore, claimed to be one of the first financial institutions to test trading in government securities and foreign exchange utilizing permissioned decentralized finance (DeFi) liquidity pools on a public blockchain.
The trades included buying and selling tokenized Singapore government assets, the Singapore dollar, Japanese government bonds, and Japanese yen as part of the city-Project state’s Guardian, which aims to investigate and test emerging financial technology.
Project Guardian, a collaboration between the central bank of Singapore and the financial sector, aims to examine the viability of asset tokenization and DeFi applications while minimizing risks to the integrity and stability of the financial system.
Tokenized bonds and deposits will be added to a permissioned liquidity pool as part of the pilot, which is being conducted by DBS Bank Ltd., JP Morgan, and Marketnode.
The move comes at a time when the Monetary Authority of Singapore (MAS), the city-central state’s bank, is committed to embracing blockchain technology and central bank digital currency in order to become the top technology-driven financial center in Asia.
Han Kwee Juan, group head of strategy and planning, at DBS cited Project Guardian as evidence that trading in a permissioned Defi protocol allows for simultaneous immediate trading, settlement, clearing, and custody. As trading under a permissioned Defi protocol achieves improved efficiency by lowering friction and limiting risks, this has the potential to change current trading processes.
