Blockchain bonds workshop: Picking the architecture for tokenised bonds

Governments are increasingly appreciating the potential of blockchain to overhaul financial markets and many are making the technology a core part of their plans for digitalising their economies. A handful of blockchain-native bonds have already emerged from the sovereign, supranational and agency community, but the instruments are a long way from becoming standard.

OMFIF’s Blockchain Bonds Working Group is assembling experts from both token-based and traditional markets to examine the direction of travel in the tokenisation industry. Through two workshops, the working group seeks to find solutions to the problems of standardisation and assess the role of public sector borrowers in setting the tone for innovation.

As issuers prepare to take the next step in issuing tokenised bonds, a new set of questions emerges. How should they design the instrument? What chains should it be available on? What token standard should they use?

For most issuers, blockchains are a novel infrastructure and the taxonomy of different protocols is baffling. Before embarking on this journey, borrowers must be confident that the infrastructure they use does not compromise on the security, integrity and privacy they require. Decisions on these topics will be vital not just for the issuers themselves but, because of the sovereign, supranational and agency market’s long history as pioneers in bond market innovation, the choices they make are likely to shape the choices made throughout the broader economy.

The second workshop in this series is designed to improve issuers’ understanding of how to assess the suitability of tokenisation platforms and blockchain infrastructure for their bonds. The outcomes of these discussions will inform the working group’s next paper, due to publish in September.

Find the first working group here.