Emerging, novel technology shows potential for faster settlement and payment services. Recently, Hong Kong’s government put its promising prospects to use, enlisting banks to launch its sale of digital green bonds.
Through the distribution of tokenized green notes, the autonomous region is planning to amass up to HK$800M ($102M). Hong Kong has recruited Bank of China Ltd., Goldman Sachs Group Inc., Credit Agricole S.A., and HSBC Holdings Plc. to hold investor calls. Moreover, Goldman Sachs will provide a ledger technology-based digital assets platform to keep track of significant concerns regarding the notes.
Digital bonds have not been around for long. However, despite its recent invention, prominent figures like the European Investment Bank and Singapore’s DBS Group Holdings Ltd. stand among one of the digital bonds’ first advocates. Blockchain system enhances the platform: providing faster settlement and coupon payments.
Joseph Chan is Hong Kong’s acting Secretary for Financial Services and the treasury. He recently stated that the issuance of the tokenized green bond would serve as an assessment of the affinity between the city’s financial infrastructure, existing regulatory and legal framework, and operational market practice with tokenized issuances. Tokenized bonds promise a brighter future: increased effectiveness and settlement and reduced cost of bond issuance, he continued.
Hong Kong is on the path to becoming Asia’s digital powerhouse. Along with tokenized bonds, the special administrative region is implementing a licensing program to authorize retail trading for crypto platforms. The process is set to come to fruition in March.
The distribution of green notes further reinforces Hong Kong’s quest to become a nucleus for sustainable financing. The city sold one of the most environmentally friendly deals, which accumulated $5.8B in green bonds.
Whether the it will engage with other associations to authorize transactions remains a mystery for now. As of today, tokenization of green bonds promises to facilitate more openness and transparency.
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