S&P Global Ratings Joins Project Guardian

S&P Global Ratings is the latest institution to join the Monetary Authority of Singapore's (MAS) massive Project Guardian. The two-year-old project examines asset tokenization's role in enhancing financial markets' liquidity and efficiency.

Objectives and Goals

Project Guardian seeks to establish standards and policy guidelines and to develop a commercially oriented digital asset ecosystem. S&P Global will participate in fixed-income pilot projects. S&P Digital Assets analytical lead Andrew O'Neill said in a statement:

"We aim to bring our risk perspective and insights to this forum to support robust risk mitigation as this technology is applied in financial markets."

Fixed-Income Pilots and Their Scope

Within the fixed-income pilots, institutions conduct foreign exchange and bond transactions against tokenized and tokenized currency liquidity pools. They also carry out repurchase agreements with digital bonds, develop a listing framework for debt securities, and initiate an initial token offering for digital tokens on the Singapore Exchange.

Broader Workflows and Network Interoperability

The project's other workflows are wealth management and foreign exchange on public blockchains, with an eye toward network interoperability. The project uses a modular network model with four components.

Historical Context and Membership

Project Guardian was launched by the MAS in May 2022, with JP Morgan, DBS Bank, and SGX venture Marketnodes as initial participants. S&P Global became the 24th member of Project Guardian's industry group, comprising predominantly large banks and asset managers.

The policymakers' group comprises government bodies from the United Kingdom, Japan, Singapore, Switzerland, and France, as well as the International Monetary Fund. There is also a three-member international associations group.

Innovations and Notable Achievements

As part of Project Guardian, JPMorgan executed a live cross-border transaction in November 2022 using tokenized Singapore dollars and Japanese yen on the Polygon blockchain. It was the first central bank to conduct a decentralized finance trade on a public blockchain.

One of the project's innovations is the deposit token, a form of stablecoin "issued by regulated and adequately supervised intermediaries."

The Swiss Bankers Association and JP Morgan have found advantages in the deposit token, such as its stability and integration of central bank digital currency into the traditional banking system.