HKMA Explores Potential for Wider Hong Kong Tokenized Bonds

2023/08/24 10:56

Hong Kong Monetary Authority (HKMA) released a report detailing the blockchain bond issuance "Project Evergreen" and exploring the potential for wider tokenized bond issuance in Hong Kong. While the report highlights the benefits of tokenization, its goal is to push things forward, so it explains some of the friction and areas that need further market-level work. HKMA CEO Eddie Yue stated in the report's preface that bond issuance demonstrates how DLT can "enhance the efficiency, liquidity and transparency of the bond market." When discussing the surge in DLT bond issuance platforms, he said "it is critical to consider how different solutions connect and interact with each other and how traditional systems avoid fragmentation." As an example of the need for integration, a section of the report explores how easy it is for custodians to process traditional bonds using Straight-Through Processing (STP). By contrast, on the new platform, digital accounts on the digital platform will also be recorded on the off-chain custody system and reconciled manually.
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