- Bank for International Settlements (BIS) and the Hong Kong Monetary Authority (HKMA) concluded a project to build prototype digital platforms that aim to enable green bond issuance with higher transparency and greater access to retail investors.
- Project Genesis allows retail investors to buy and sell tokenized green bonds and see the positive environmental impact that the financed projects achieve on an app.
- The two prototypes show that technologies, including distributed ledger technology (DLT), can be used to streamline the green bond issuance process, while making it easier to track projects’ positive environmental impact.
The Bank for International Settlements (BIS) Innovation Hub announced the successful conclusion of Project Genesis, two prototype digital platforms that aim to enable investment in green bonds with higher transparency and greater access to retail investors.
The platforms combine blockchain, smart contracts, internet-of-things, and digital assets. They allow issuers and other stakeholders to explore innovative approaches to green bond distribution and transparency. Retail investors will be able to continuously track coupon payments and the positive environmental impact that the financed projects achieve in terms of reduced carbon dioxide emissions.
The Innovation Hub is publishing technical reports detailing the two prototype platforms. The first prototype simulates the lifecycle of a typical bond on a permissioned distributed ledger platform, including origination, subscription, settlement and secondary trading. The prototype was able to considerably streamline these processes. A second prototype tested the same procedures using a public blockchain infrastructure. It also streamlines the investor onboarding and facilitates the direct payment and settlement between the issuer and investor.
Both prototypes show that DLT technology can be used to streamline green bond issuance across the lifecycle and ensure that retail investors have full transparency on the use of proceeds, in real time on an easy to download app. This digitized framework helps in reducing costs and time and should enable better financing terms overall.
Bénédicte Nolens, head of the BIS Innovation Hub Hong Kong Centre, said in a statement: “The project has demonstrated the possibility of leveraging technology such as DLT to enhance the efficiency and transparency in the bond life cycle, facilitating further uptake of green and sustainable finance.”
Darryl Chan, executive director (external) of the HKMA, said in a statement: “Project Genesis is guided by a multi-disciplinary panel of experts in environmental, social and governance (ESG) issues, green finance, bond markets, law and regulation.”