Smart bond (finance)

A smart bond is a specific type of an automated bond contract that uses the capabilities of blockchain databases that can operate as cryptographically-secure yet open and transparent general ledgers. It is one of a class of financial instruments known as a smart contract, "a computerized transaction protocol that executes the terms of a contract."[1]

For other uses, see Smartbond (monetary system).

History

As early as 2014, banking executives were speaking publicly about the ability of blockchain technology to trigger significant "simplification of banking processes and cost structure."[2]

As of 2015, UBS was experimenting with smart bonds that use the bitcoin blockchain[3] in which "risk free interest rates and payment streams [could be] fully automated, creating a self-paying instrument."[4] The Huffington Post reports than an announcement of the UBS smartbond service is expected in 2016.[5]

In 2018, the World Bank mandated the Commonwealth Bank of Australia for the world’s first blockchain bond.[6]

References
  1. Tapscott, Don; Tapscott, Alex (May 2016). The Blockchain Revolution: How the Technology Behind Bitcoin is Changing Money, Business, and the World. pp. 72, 83, 101, 127. ISBN 978-0670069972.
  2. Irrera, Anna (2014-10-27). "UBS CIO: Blockchain Technology Can Massively Simplify Banking". Wall Street Journal. Retrieved 2016-05-27.
  3. Ross, Rory (2015-09-12). "Smart Money: Blockchains Are the Future of the Internet". Newsweek. Retrieved 2016-05-27.
  4. Wigan, David (2015-06-11). "Bitcoin technology will disrupt derivatives, says banker". IFR Asia. Retrieved 2016-05-27.
  5. Seaman, David (2016-08-10). "Ethereum: Here Come The Big Banks". Huffington Post. Retrieved 2016-08-11.
  6. "World Bank Mandates Commonwealth Bank of Australia for World's First Blockchain Bond". The World Bank. Retrieved 22 April 2019.
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