S&P joins MAS’ Project Guardian initiative
S&P Global Ratings recently announced that it has joined the Monetary Authority of Singapore’s (MAS) large-scale initiative, Project Guardian. The two-year-old initiative aims to study the role of asset tokenization in improving financial market liquidity and efficiency. S&P will participate in the Fixed Income Pilot Project, which aims to establish standards and policy guidance and develop a business-oriented digital asset ecosystem.
"We hope to bring our risk perspective and insights to this forum to support the technology's powerful risk mitigation in financial market applications," Andrew O'Neill, head of digital asset analytics at S&P, said in a statement.
Project Guardian prioritizes tokenization
In a fixed income pilot project, institutions are conducting FX and bond trading against liquidity pools of tokenized bonds and currencies. They are also working on repurchase agreements for digital bonds and developing structures for the listing of debt securities and initial coin offerings (ITOs) of digital tokens on the Singapore Exchange.
Other workstreams of the plan include wealth management and foreign exchange trading on public blockchains, with a focus on enabling network interoperability. Project Guardian uses a modular network model consisting of four components.
Project Guardian was launched in May 2022 by the Monetary Authority of Singapore, with initial participation from JP Morgan, DBS Bank and Singapore Exchange Ventures Marketnodes. S&P Global Ratings becomes the 24th member of the Project Guardian industry group, which consists primarily of large banks and asset managers.
The legislative group consists of government agencies from the United Kingdom, Japan, Singapore, Switzerland and France, and also includes the International Monetary Fund (IMF). In addition, there is a three-member International Association Group.
Source: Project Guardian Project Guardian member list
Tokenization applications and innovations
As part of Project Guardian, JPMorgan executed a cross-border transaction on the Polygon blockchain in November 2022 using tokenized Singapore dollars and Japanese yen. It is the first major bank to conduct decentralized financial transactions on a public blockchain. This transaction represents a significant advance in the practical financial application of tokenization.
One of the innovations of the program is the Deposit Token – a stablecoin issued by a regulated and fully supervised intermediary. The Swiss Bankers Association and JP Morgan found that deposit tokens offer advantages in terms of stability and are a way to integrate central bank digital currencies (CBDC) into the traditional banking system.
Image source: X JP Morgan executed a cross-border transaction on the Polygon blockchain using tokenized Singapore dollars and Japanese yen in November 2022
The significance of S&P’s participation
S&P Global Ratings has joined Project Guardian under its fixed income work stream, which will provide analytical architecture, risk assessment and benchmarking for digital assets and tokenized markets.
Chuck Mounts, Chief DeFi Officer at S&P, said: “We are excited to join Project Guardian. This is our commitment to leveraging our powerful analytics and risk assessment capabilities to support traditional finance (TradFi) and the growing crypto-native decentralized finance ( DeFi) customer base is another important step.”
Through this collaboration, S&P and the Monetary Authority of Singapore are working together to promote the development of the digital asset ecosystem and explore the potential and applications of asset tokenization in future financial markets. This plan will not only promote financial innovation, but also bring greater efficiency and liquidity to global financial markets.