Why digital bond issuance has disappointed
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Why digital bond issuance has disappointed

The challenges around distributed ledger technology implementation and integration for bond issuance have proved more significant than early proponents had hoped.

Global digital mesh network, Blockchain, Distributed ledger technology
Photo: iStock

This time last year, it seemed as if bond issuance in tokenized form was taking off. Siemens had issued its first corporate bond on blockchain and the European Investment Bank issued a first sterling bond on a combination of public and private chains.

However, the lack of progress over the last 12 months is evidenced by the attention attracted by a Canadian olive oil bottling company issuing a €500,000 blockchain-based bond last June.

DLT technology is very different to traditional technology... and there are a limited number of experts available to plan large-scale migrations
David Creer, GFT
David Creer, GFT_960.jpg

Why have corporates been reluctant to embrace digital bond issuance?

The answer lies in the complexity that the implementation of these systems entails and the impact of migrating from traditional banking and exchange systems, suggests David Creer, global DLT, crypto and e-money lead at financial services software provider GFT.

The promise of smart contract-based technology is that sophisticated cash flows can be encoded in a dedicated program shared and trusted by all parties without the need for all parties to enhance their existing systems beforehand.


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