Summary
- The European Central Bank's blockchain-based digital bond experiment reportedly failed as issuance costs increased unexpectedly.
- Legal costs and the presence of intermediaries in the process of connecting with traditional finance were cited as major reasons for the cost increase.
- It was stated that reducing the number of participants and establishing an on-chain settlement mechanism is necessary to reduce blockchain bond issuance costs.
Marat Faritov, VP of the digital assets division at global credit rating agency Moody's, stated in an interview with Cointelegraph on the 12th (local time) that "the European Central Bank (ECB)'s blockchain-based digital bond experiment has failed." He noted, "Recently, the ECB conducted a digital bond issuance test involving more than 60 bond issuers and four Eurozone national central banks. However, contrary to the initial expectation that blockchain technology would reduce costs, issuance costs actually increased." He explained, "Legal costs, the lack of an on-chain settlement mechanism, and the presence of intermediaries involved in the entire process of connecting traditional finance with on-chain systems contributed to the increase in costs, leading to the experiment's failure." Nonetheless, he added, "If the number of participants in the blockchain bond process is reduced and intermediaries are eliminated through a complete on-chain settlement mechanism, the cost of issuing tokenized bonds is likely to decrease." 
JH Kim
reporter1@bloomingbit.ioHi, I'm a Bloomingbit reporter, bringing you the latest cryptocurrency news.
