Singapore Collaborates with Financial Industry to Explore Use Cases for Digital Currency

The Monetary Authority of Singapore (MAS), the de facto financial regulator of the central bank of Singapore, seeks to explore the “economic potential and value-added use cases” of digital assets.

In its latest announcement, the MAS launched a collaborative initiative with the financial industry called Project Guardian. Project Guardian will test the feasibility of managing financial stability and integrity risks using public blockchains for asset tokenization and decentralized finance (DeFi).

The project will develop and pilot use cases focused on four main areas: open and interoperable networks, trust anchors, asset tokenization, and institutional-grade DeFi protocols. DBS Bank Ltd., JPMorgan Chase & Co. and Marketnode Pte. will lead the industry’s first pilot project.

These institutions are responsible for exploring potential DeFi applications in wholesale funding markets. They need to create an authorization liquidity pool comprising tokenized bonds and deposits to facilitate lending and borrowing on a public blockchain using smart contracts.

All three partners accepted the challenge of working with MAS. In a statement, Marketnode CEO Martin Pickrodt said the company is ready to solve market problems with “Singapore’s innovative and meaningful initiative”.

“Through Project Guardian, we aim to address real market issues, such as fragmented liquidity venues, high intermediation costs and transaction inefficiencies, and we look forward to the journey ahead,” he said. -he declares.

MAS FinTech Director Sopnendu Mohanty added that the initiative would enhance the regulator’s understanding of the digital asset ecosystem.

“Through hands-on experimentation with the financial industry and broader ecosystem, we seek to refine our understanding of this rapidly transforming digital asset ecosystem,” Mohanty said.

Notably, Singapore has used a similar approach with industry partners in the ongoing exploration of its CBDC. Last year, it named 15 companies involved in the project to help it build a retail CBDC.

Is Singapore falling out of favor with digital asset companies?

The initiative comes at a critical time for Singapore. The Southeast Asian country has long been known as a financial hub and is striving to become a hub of digital assets as well.

However, its policies have not kept up with the requirements of digital asset companies. Bloomberg reports that Singapore’s slowness to license digital asset firms and other bottlenecks has prompted companies to relocate, most often to Dubai.

Despite the apparent exodus, Singapore has continued to profess an open mind to digital currencies. MAS said it believes stablecoins have a place in the country even as it develops its digital currency.

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