BIS Opens New Innovation Hub, Concludes First Green Finance Project
The Bank for International Settlements (BIS) announced three new senior appointments to head the newest BIS Innovation Hubs, which help to expand its network to support central bank collaboration on new financial technology. The London and Nordic centers were launched in June and will be operated in collaboration with the host central banks: the Bank of England for the London center and the central banks of Denmark, Iceland, Norway, and Sweden for the Nordic center. The Toronto center will open in 2022 in collaboration with the Bank of Canada; it will serve as a key platform for central bank innovation in the Western Hemisphere. The BIS Innovation Hub also announced the successful conclusion of Project Genesis, which involves the 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 also published 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.
- The second prototype tested the same procedures using a public blockchain infrastructure. It streamlines investor onboarding and facilitates direct payment and settlement between the issuer and the investor.
"Both prototypes show that DLT [Distributed Ledger Technology] 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," said Bénédicte Nolens, Head of the BIS Innovation Hub Hong Kong Center. 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. BIS published a collection of articles by members of the panel is being published alongside the technical reports. Each expert contributed an article giving their views on key aspects of their areas of expertise.
Related Links
- Press Release on New Centers
- Press Release on Project Genesis
- Report on Prototype 1 (PDF)
- Report on Prototype 2 (PDF)
- Report on Articles by Experts (PDF)
Keywords: International, Banking, Fintech, Denmark, Canada, UK, Iceland, Norway, Green Bonds, Nordics, Innovation Hub, Regtech, DLT, Project Genesis, ESG, Sustainable Finance, BIS
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