The Central Bank of Colombia announced its participation in the country’s first blockchain bond pilot program, with the participation of the Inter-American Development Bank (IDB) and the private commercial bank Davivienda. The proof of concept will use the Lacchain blockchain platform developed by IDB, which will handle the operational part of the issuance.
The Central Bank of Colombia joins the blockchain bond pilot program
The Central Bank of Colombia announced its participation in the country’s first blockchain bond program. The pilot project was issued by Davivienda, one of Colombia’s most important commercial banks, and was consulted by the Inter-American Development Bank (IDB) to explore the benefits of new technologies and study its application in the next bond issuance.
According to the official announcement of the Central Bank of Colombia, these benefits will include reducing operating costs, optimizing process time, improving the efficiency of operational traceability and security, eliminating information asymmetry, and better managing financial risks.
These bonds will be issued and managed using IDB’s blockchain platform Lacchain, which is designed to support such applications. The role of the central bank will be to run an observation node in the blockchain and support the issuance of its high-value payment system.
Colombians seek blockchain
Although Colombia is not known for adopting cryptocurrency or blockchain, the country is slowly introducing its financial system to the idea of these new technologies. Earlier this year, in February, the country’s financial regulator, the China Securities Regulatory Commission, authorized the establishment of a regulatory sandbox, allowing some banks to establish alliances with exchanges to jointly process cryptocurrency purchases. Davivienda, a bank participating in this blockchain bond experiment, is also included in this batch of banks.
The purpose of establishing this sandbox is to better understand how the cryptocurrency system works in conjunction with the traditional banking system to issue laws that adapt to this new paradigm. This shows that Colombian regulators are looking at cryptocurrencies as a potential influence on the country in the coming years. However, Colombia’s retail cryptocurrency business is small in scale and has not reached its importance in other countries in the region such as Venezuela or Argentina.
What do you think of Colombia’s first pilot project of blockchain issuance of bonds? Tell us in the comments section below.
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