S&P Global Ratings is the latest institution to join the Monetary Authority of Singapore’s (MAS) massive Project Guardian. The two-year-old project examines the role asset tokenization can play in the liquidity and efficiency of financial markets.

Project Guardian seeks to establish standards and policy guidelines and to develop a commercially oriented digital asset ecosystem. S&P Global will participate in fixed-income pilot projects. S&P Digital Assets analytical lead Andrew O'Neill said in a statement:

"We aim to bring our risk perspective and insights to this forum to support robust risk mitigation as this technology is applied in financial markets."

 

Project Guardian offers S&P a lot to look at

Within the fixed-income pilots, institutions are conducting foreign exchange and bond transactions against liquidity pools of tokenized bonds and currencies. They are also carrying out repurchase agreements with digital bonds an developing a listing framework for debt securities and an initial token offering for digital tokens offered on the Singapore Exchange.

The project’s other workflows are wealth management and foreign exchange on public blockchains, with an eye toward network interoperability. The project uses a modular network model with four components.

Project Guardian was launched by the MAS in May 2022, with JP Morgan, DBS Bank and SGX venture Marketnodes as initial participants. S&P Global became the 24th member of Project Guardian’s industry group, which is made up of predominantly large banks and asset managers.

The policymakers’ group consists of government bodies from the United Kingdom, Japan, Singapore, Switzerland and France, as well as the International Monetary Fund. There is also a three-member international associations’ group.

Project Guardian prioritize tokenization

As part of Project Guardian, JPMorgan executed a live cross-border transaction in November 2022 using tokenized Singapore dollars and Japanese yen on the Polygon blockchain. It was the first major bank to carry out a decentralized finance trade on a public blockchain.

One of the innovations to come out of the project is the deposit token — a form of stablecoin “issued by regulated and adequately supervised intermediaries.” The Swiss Bankers Association and JP Morgan have found advantages in the deposit token for their stability and as a way to integrate central bank digital currency into the traditional banking system.

Source : Cointelegraph - Jun 27, 2024