Moody’s Analyst: ECB digital bond trial fails to lower cost

Marat Faritov, Vice President (VP) of digital assets at Moody’s, outlined in an interview with Cointelegraph that the European Central Bank’s (ECB) blockchain-based digital bond experiment has failed to prove that costs can be lowered. The ECB recently conducted a digital bond issuance test with over 60 bond issuers and four eurozone central banks, Faritov explained. Contrary to initial expectations that blockchain technology would reduce costs, it actually increased issuance costs, he asserted. Legal costs, the lack of an on-chain settlement mechanism and the presence of intermediaries involved in the entire process of connecting traditional finance and on-chain systems contributed to the increase in costs, leading to the experiment’s failure, he explained. However, he added that if the number of parties involved in the blockchain bond process is reduced and intermediaries are eliminated through a fully on-chain settlement mechanism, the cost of issuing tokenized bonds is likely to decrease.