The payment and delivery cycle for tokenized green bonds issued by the Hong Kong government has been significantly shortened from T+5 to T+1 thanks to the application of tokenization technology.

Tokenization enhances capital transfer speed and optimizes transaction efficiency while minimizing friction costs in investments through digital assets and Blockchain technology.

MAIN CONTENT

  • The payment cycle for tokenized green bonds has been shortened from T+5 to T+1.

  • Tokenization technology accelerates capital transfer and improves transaction efficiency.

  • Digital assets and Blockchain help reduce friction costs in financial transactions.

What is tokenization of green bonds and what are its effects?

Finance experts affirm that tokenization is the technology that converts traditional assets into digital tokens on the Blockchain, increasing liquidity and transparency.

When tokenized, green bonds not only shorten transaction times but also facilitate faster access for investors while ensuring safety and transparency of information thanks to Blockchain technology. This effectively connects the financial market with the real economy.

What does shortening the payment cycle from T+5 to T+1 mean?

Mr. Paul Chan, Hong Kong's Secretary for Financial Services and the Treasury, emphasizes that this is an important step to increase capital circulation speed and improve liquidity in the bond market.

Tokenization technology helps shorten transaction cycles, minimize liquidity risk, and enhance overall economic efficiency.
Paul Chan, Secretary for Financial Services and the Treasury of Hong Kong, July 2024

Previously, the transaction and delivery process took up to 5 days post-transaction (T+5), which could delay capital; now it takes just one day (T+1), improving cash flow, reducing opportunity costs, and increasing flexibility for both investors and issuers.

How have Token and Blockchain technologies contributed to this change?

Blockchain technology experts emphasize that the adoption of digital assets and Blockchain eliminates intermediaries, reduces friction costs, and provides a transparent, tamper-proof transaction storage and verification system.

Blockchain acts as a distributed ledger, recording all tokenized bond transactions in real-time, increasing reliability and shortening confirmation times that traditional trading methods find hard to achieve.

Practical application of tokenization of green bonds in Hong Kong

The tokenization system for green bonds exemplifies the trend of sustainable finance, facilitating fast and efficient fundraising for green projects contributing to global green economic development.

Businesses and investors in Hong Kong and internationally can access this financial product faster, expand liquidity for the green bond market, incur low transaction costs, and maximize time savings.

Tokenization not only promotes sustainable financial growth but also enhances the connection between the financial market and the real economy through modern technology.
International Finance Expert, 2024

Frequently Asked Questions

  • What is the tokenization of green bonds?
    Tokenization is the conversion of traditional bonds into digital tokens on the Blockchain to enhance transaction speed and transparency.

  • What do T+1 and T+5 mean in trading?
    T+1 is a payment cycle one day after the transaction, while T+5 is a five-day cycle after, shortening the time helps improve liquidity and capital speed.

  • What role does Blockchain technology play?
    Blockchain provides a secure, transparent transaction storage system, helping reduce costs and transaction times.

  • What are the benefits of shortening the payment cycle?
    It helps capital flow quickly, reduces liquidity risk, and saves costs for investors.

  • Can tokenization be widely applied?
    Token technology is currently expected to be applied to various asset types and closely connected with the real economy.

Source: https://tintucbitcoin.com/trai-phieu-xanh-so-hoa-rut-ngan-t1/

Thank you for reading this article!

Please Like, Comment, and Follow TinTucBitcoin to stay updated with the latest news about the cryptocurrency market and not miss any important information!