The major financial institution of Singapore, DBS bank, is applying decentralized finance (DeFi) for a project backed by Singapore’s central bank. It announced that it had taken another step in reimagining the future of financial markets.
DBS became one of the first banks globally to test the trading of foreign exchange (FX) and government securities using permissioned DeFi liquidity pools on a public blockchain through its Project Guardian.
The Monetary Authority of Singapore (MAS) announced the beginning of Project Guardian in May. MAS tested the digital assets with industry giants, including JP Morgan, DBS and SGX-Temasek.
DBS reports that the trade comprised of the outright purchase and sale of tokenized Singapore Government Securities (SGS), Singapore Dollar (SGD), Japanese Government Bonds and Japanese Yen (JPY).
DBS also reports that the project has shown how instant trading, settlement, clearing, and custody may all take place simultaneously using a private DeFi protocol. The initiative has the potential to transform the existing trading processes by providing better liquidity across multiple financial assets and markets.
Han Kwee Juan, Group Head of Strategy and Planning DBS, said, “this is a significant first step towards laying the foundations for building global institutional liquidity pools that allow for increased trading velocity, greater transparency, higher efficiencies, lower settlement risks and economies of scale.”
