Singapore Apex Financial Institution Adopts DeFi for FX And Government Securities Trading

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One of the central Asian financial firms and the apex institution in Singapore is DBS bank. The institution has incorporated decentralized finance (DeFi) technology for trading all foreign exchange (FX).

Some government-owned securities will also be included in the trade using DeFi as a tool.

 DBS bank had the support of the Monetary Authority of Singapore (MAS) to kick start this project. The institution has started using tools like Public and private Defi Liquidity pools (DFP).

The announcement was made on Wednesday, November 2, 2022, as part of the institution’s projects. One of the project’s principal aims is to upgrade and sustain the country’s financial status.

How DBS Tested the Use of Defi for FX Trading

This development in Singapore’s financial sector was geared up through an initiative tagged “Project Guardian.” This industry-spanning initiative was formulated and supported by the Monetary Authority of Singapore.

The testing was carried out on a public blockchain and centered on tokenized SGS, SGD, and JPY.

At the testing stage, the institution purchased and sold tokenized Singapore Government Securities (SGS). Japanese state-owned bonds and the Japanese Yen (JPY) were also used during trading activities. The project revealed that trading on a secret Defi protocol is always profitable if the proper techniques are applied.

The initiative has demonstrated how prompt trading, settlement, handling, and possession coincide. Such an occurrence occurs only when a corporate Defi protocol is used. DBS revealed that its effort could transform the current process that trading requires.

This will be achieved by optimizing liquidity on a wide range of financial securities and markets.

Singapore Derivable Benefits from Defi Technology

DBS’ Head of Strategy, Han Kwee Juan, said that the recent Project Guardian is the best solution. The project will soon become a bedrock for creating a global intergovernmental liquidity pool. It will enable rapid trading, broader transparency, reduced payment hazards, and other crucial benefits. 

Han said that smart contracts reveal a lot of opportunities for trade execution and validation. He made the point that a marketplace with high liquidity helps draw numerous investors.

Also, it leads to better performance by eliminating intermediaries, making the market more flexible.

The payment procedure is complicated because FX and SSG are traded in over-the-counter marketplaces. Such a market involves several intermediaries, and this makes it risk-filled.

The institution made a significant move into crypto by launching an intergovernmental crypto exchange in December 2020.

The recent move of DBS will involve the mixture of Defi technology and centralized Finance tools for easy access. Defi will function effectively with the Singapore digital currency by complementing each other, Hans said.  

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