Green bond experiment bears fruit: BIS

An experiment in using technology to facilitate retail investor participation in green bond issuance concluded successful testing, paving the way for innovation in sustainable finance, the Bank for International Settlements (BIS) announced.

The BIS said its innovation unit concluded a joint project with the Hong Kong Monetary Authority (HKMA) that sought to test a couple of digital platform prototypes that would enable green bonds to be issued with greater transparency and retail investor participation.

Project Genesis explored the idea of allowing retail investors to buy and sell tokenized green bonds, and enabling them to track on an app the environmental impact of the projects financed.

“Both prototypes show that [distributed ledger] 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,” said Bénédicte Nolens, head of the BIS Innovation Hub Hong Kong Centre, in a release.

“This digitized framework helps in reducing costs and time and should enable better financing terms overall,” she added.

The BIS Innovation Hub also published technical reports detailing the two prototype platforms.

“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. We hope the findings could promote further development in this area,” said Darryl Chan, executive director of the HKMA.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.