Palau, a small island nation in the Pacific Ocean, and German lender WIBank have joined the growing trend of issuing blockchain bonds. Palau has partnered with Tokyo-based blockchain services company Soramitsu and Japan’s Ministry of Economy, Trade and Industry to launch blockchain savings bonds. The initiative aims to raise capital for infrastructure projects within Palau by tapping into local capital sources and reducing capital outflow. The bonds will be issued on a blockchain network developed by Soramitsu, allowing investors to purchase them through a mobile app.
Meanwhile, WIBank, a subsidiary of Landesbank Hessen-Thüringen, has issued a €5 million blockchain bond using Trigger, a system developed by Germany’s central bank. Trigger connects the blockchain holding the tokenized assets to the traditional payment infrastructure, enabling atomic transactions and eliminating counterparty and credit risks. WIBank’s experience with this blockchain bond opens up new possibilities for the development of financial products leveraging innovative technologies, according to Christian Forma, the Head of Treasury at WIBank.
While blockchain bonds are gaining popularity, they still remain a niche market with limited participants. However, efforts are being made to integrate blockchain bonds with conventional channels to make them available to a larger investor base. For instance, in Hong Kong, HSBC recently integrated the HKMA’s Central Moneymarkets Unit when issuing a digital bond on its Orion blockchain platform.