DBS Bank Has Tested Blockchain Tech For Forex Transactions
- The largest lender in Southeast Asia, DBS Bank, has tested the trading of foreign exchange and government securities using permissioned decentralized finance (DeFi) liquidity pools on a public blockchain,
- The testing was done in collaboration with known players in the financial industry, and DBS Bank Ltd., JP Morgan, and SBI Digital Asset Holdings worked together under Singapore’s Project Guardian.
- Project Guardian is an innitiative between Singapore’s government and the city-state’s financial industry and its goal is to explore the benefits associated with the integration of blockchain technology
DBS Bank, one of the biggest names in the banking industry, and the largest lender in Southeast Asia, has confirmed that it was among the first few banks to test the trading of foreign exchange and government securities using permissioned decentralized finance (DeFi) liquidity pools on a public blockchain as a part of Singapore’s Project Guardian.
The Singapore-based DBS bank also added that the trades under Project Guardian were tested to explore and test financial technology developments in the city state using new technology such as blockchain and decentralized finance (DeFi). According to a report, the trades consisted of purchase and sale of tokenized Singapore government securities along with the Singapore dollar, Japan government bonds and Japanese yen.
Project Guardian is an innitiative between Singapore’s government and the city-state’s financial industry and its goal is to explore the benefits associated with the integration of blockchain technology in the traditional finance industry with the help of asset tokenization and DeFi. Moreover, the project also aims to reduce the risks to financial stability and integrity while carrying out this task.
“This test trade has demonstrated that by harnessing the power of blockchain, the standards by which financial institutions currently deal with each other can be transformed and reimagined for greater efficiency and transparency,” said Han Kwee Juan, group head of strategy and planning, at DBS.
Additionally, it is also crucial to note that the testing was done in collaboration with known players in the financial industry, and DBS Bank Ltd., JP Morgan, and SBI Digital Asset Holdings worked together on this new venture. The testing involved the creation of a permissioned liquidity pool comprising tokenized bonds and deposits.
This venture from the financial giants comes at a time when the financial regulator of the city-state, the Monetary Authority of Singapore (MAS), aims to lead the global crypto industry with blockchain adoption and regulation of digital assets. However, the regulator is also taking measures to prevent financial disasters like Do Kwon’s Terra ecosystem collapse.
According to Han, trading in a permissioned liquidity pool provided the benefit of instant trading, settlement, clearing, and custody simultaneously which resolves several issues related to traditional finance by reducing friction and minimizing risks. Additionally, DBS Bank believes that the integration of blockchain tech could transform current trading processes.
“A highly liquid market attracts more investors and achieves efficiency gains by bypassing intermediaries,” Han said in the statement.
Furthermore, in a statement, Sopnendu Mohanty, Chief FinTech Officer at MAS, stated that the live pilots “demonstrate that with the appropriate guardrails in place, digital assets and decentralized finance have the potential to transform capital markets.”
A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.
