Collaboration of Hong Kong with Brazil's and Thailand's central banks to digitize bonds, providing digital bond grants
Hong Kong has made a significant stride in the digital bond market, having previously issued two tokenized green bond issuances, one conventional and one natively digital. The Hong Kong Monetary Authority (HKMA) is now taking this momentum forward with the introduction of the Digital Bond Grant Scheme.
Under this scheme, the HKMA is offering grants of up to HK$2.5 million for each eligible digital bond issuance. This move is aimed at encouraging more financial institutions to issue digital bonds, thereby fostering innovation and growth in the digital asset sector.
The second tokenized green bond issuance from Hong Kong was worth more than US$750 million across multiple currencies, making it a significant player in the global digital bond market. However, it's important to note that the name of the bank that issued this bond remains undisclosed due to the limited information available.
The Digital Bond Grant Scheme is not the only initiative by the HKMA to support the digital asset sector. The authority is also collaborating with the central banks of Brazil and Thailand for cross-border tokenization transactions. This collaboration expands to explore cross-border tokenization for wholesale Central Bank Digital Currency (CBDC) transactions, which could pave the way for more efficient and secure international transactions.
In addition to this, the scheme includes atomic settlement of digital asset transactions and wholesale CBDC (payment versus payment). Atomic settlement ensures that a transaction is either completed in its entirety or not at all, providing a high level of security and certainty.
Hong Kong's commitment to the digital asset sector doesn't stop here. The authorities plan to publish guidelines for the new Digital Bond Grant Scheme, providing clarity and direction for financial institutions looking to participate in this exciting new market.
For those interested in staying updated on the latest developments in the digital bond market, the full article contains exclusive industry analysis and early access to legislative updates. However, access to this article is limited to Pro subscribers.
As Hong Kong continues to push the boundaries in the digital asset sector, it's clear that the city is positioning itself as a global leader in the field. With initiatives like the Digital Bond Grant Scheme and international collaborations, Hong Kong is setting a strong example for other financial hubs to follow.
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