South Korea’s Hana Bank has issued a five-year digital bond valued at $100 million, utilizing Euroclear’s blockchain-based Digital Financial Market Infrastructure platform. This marks the first time a South Korean institution has conducted a digital bond issuance directly on Euroclear’s blockchain system.
Bond processed on distributed ledger
According to Yonhap News Agency, the bank processed the bond’s issuance, registration, and settlement on a distributed ledger network. The use of blockchain for these steps reportedly reduced the entire bond process, which typically takes three to five business days, to a single day.
Bank officials stated that leveraging blockchain technology enabled increased efficiency and transparency for bond allocation and payment settlement. The new process also streamlines access for investors by connecting to Euroclear’s existing global settlement network, allowing them to trade the bond using their established accounts and trading systems.
Euroclear, an international financial services company specializing in the settlement of securities transactions, designed its Digital Financial Market Infrastructure to modernize and digitize securities issuance and settlement processes.
Mini dictionary: Euroclear is a Brussels-based provider of post-trade services for securities transactions, operating one of the world’s largest settlement systems and recently expanding into digital securities infrastructure.
The bond issuance, registration, and settlement were processed on a distributed ledger network, reportedly shortening the settlement period from several days to the same day.
Global platform adoption
Euroclear’s Digital Financial Market Infrastructure platform connects digital bond issuance directly to its global settlement network. This enables seamless trading and account management for international investors without the need for additional integration steps.
Hana Bank’s adoption of the platform aligns with a broader trend among financial institutions seeking efficiency through blockchain technology. Using Euroclear’s infrastructure provides investors with easier access to South Korean digital bonds through a familiar platform.
Euroclear launched its Digital Securities Issuance service in October 2023. In its inaugural transaction, it settled a 100 million euro digital bond issued by the International Bank for Reconstruction and Development, the World Bank’s lending arm. That three-year bond aimed to raise funds for sustainable development and was listed on the Luxembourg Stock Exchange.
| Issuer | Bond Amount | Bond Tenor | Platform | Date |
|---|---|---|---|---|
| Hana Bank | $100 million | 5 years | Euroclear Blockchain | 2024 |
| International Bank for Reconstruction and Development | €100 million ($106 million) | 3 years | Euroclear Blockchain | Oct 2023 |
Euroclear’s platform enables investors to settle digital bond transactions through existing accounts and systems connected to the traditional global settlement network.
Market implications
The direct use of Euroclear’s blockchain infrastructure by Hana Bank demonstrates a significant step towards digitization in the South Korean bond market. It also showcases growing acceptance of blockchain solutions in mainstream finance globally.
Euroclear’s recent expansion into Asia, including its investment in Marketnode, underlines the increasing demand for digital securities infrastructure in the region. Market participants continue to monitor further adoption of blockchain in bond issuance among Asian financial institutions.
