of Monetary Authority of Singapore (MAS) has announced plans to advance the tokenization of assets within the financial services sector.
The move aims to enhance the way financial markets operate by digitally representing assets such as bonds and stocks.
MAS has been considering tokenization. project guardianwhich includes more than 40 financial institutions and policy makers Spanning seven jurisdictions.
The project completed over 15 industry trials in six different currencies and tested a variety of financial products.
The main focus of this initiative is to deepen liquidity in the tokenized asset market and facilitate capital raising and trading expansion.
To accelerate progress, MAS is now fostering a connected network for trading tokenized assets and encouraging participants to commercialize their discoveries.
Major banks such as Citi, HSBC and Standard Chartered formed the Guardian Wholesale Network to create this ecosystem.
MAS is Global Layer 1 (GL1) Initiative Supports cross-border trading of tokenized assets.
GL1 defines management principles, develops specifications, and ensures “compliance by design” to align governance and risk management practices.
This includes programmable compliance that automates regulatory checks.
The initiative will include new contributors such as Euroclear, and a working group will be established to establish governance principles for digital asset securities.
Two new industry frameworks have been introduced to support tokenization. Guardian Fixed Income Framework (GFIF)setting the industry standard for debt tokenization. Guardian Fund Framework (GFF)provides best practices for tokenized investment vehicles.
Access to common payments functionality is also being facilitated through the SGD Testnet, which features a wholesale central bank digital currency (CBDC) of S$ for market testing.
The SGD testnet will be available to eligible financial institutions participating in Project Guardian and Project Orchid, allowing them to settle transactions with the S$ wholesale CBDC.
This functionality includes key features such as digital currency issuance, transfer, and redemption, as well as programmability with automatic triggers and interoperability with existing financial market infrastructure.
Participating financial institutions including DBS, OCBC, Standard Chartered and UOB will pilot these settlements.
Mr. Leong Sing Chiong, MAS Deputy Managing Director (Markets and Development);
“MAS has had a strong interest in the tokenization of assets in recent years, particularly in fixed income, foreign exchange, and asset management.
We are committed to the enthusiastic participation of financial institutions and policymakers to co-create industry standards and risk management frameworks to accelerate the commercial deployment of tokenized capital markets products and expand tokenization markets across the industry. We are encouraged. ”
Featured image credit: Edited from freepic
