S&P Global Ratings has recently joined the Monetary Authority of Singapore’s (MAS) ambitious Project Guardian, which focuses on exploring the potential of asset tokenization in enhancing liquidity and efficiency in financial markets. This project, which has been ongoing for two years, aims to establish standards and policy guidelines while developing a commercially-oriented digital asset ecosystem. S&P Global will participate in fixed-income pilot projects as part of this initiative.
Within these fixed-income pilots, institutions are conducting foreign exchange and bond transactions using liquidity pools of tokenized bonds and currencies. They are also engaging in repurchase agreements with digital bonds and are working on a listing framework for debt securities. Additionally, they are exploring the possibility of an initial token offering for digital tokens on the Singapore Exchange.
Project Guardian encompasses various workflows, including wealth management and foreign exchange on public blockchains, with a focus on network interoperability. The project follows a modular network model consisting of four components.
Launched by MAS in May 2022, Project Guardian initially included JP Morgan, DBS Bank, and SGX venture Marketnode as participants. S&P Global has now become the 24th member of the project’s industry group, which primarily comprises large banks and asset managers. The project also involves a policymakers’ group consisting of government bodies from the UK, Japan, Singapore, Switzerland, and France, as well as the International Monetary Fund. Additionally, there is a three-member international associations’ group.
Tokenization is a key priority within Project Guardian. As part of the initiative, JPMorgan executed a live cross-border transaction in November 2022 using tokenized Singapore dollars and Japanese yen on the Polygon blockchain. This transaction marked the first decentralized finance trade on a public blockchain conducted by a major bank.
One notable innovation emerging from the project is the deposit token, which is a type of stablecoin issued by regulated and adequately supervised intermediaries. The Swiss Bankers Association and JP Morgan have recognized the benefits of deposit tokens in terms of stability and their potential to integrate central bank digital currency into the traditional banking system.
It is evident that blockchain technology is revolutionizing the real estate market, as demonstrated by the advancements made through Project Guardian.