Editorial | Digital green bonds point way forward
- The HK$800 million issuance will be an experiment to see how well the city can handle fintech and climate change at the same time
Talk about killing two birds with one stone. The Hong Kong government’s launch of green digital bonds for the first time will be an experiment to jointly test the city’s ability to handle blockchain technology and sustainable project financing.
The launch aims to raise HK$800 million (US$102 million), with the proceeds from the local-currency notes to be used to finance or repay eligible projects under the city’s green bond framework to counter climate change.
The planned note sale will continue Hong Kong’s efforts to become a hub for sustainable financing. Last month, the city sold its largest-ever green bonds worth US$5.75 billion denominated in the US dollar, euro and yuan.
However, the difference this time is that the notes will be tokenised, which means all bondholders will be recorded on a distributed ledger via blockchains. The relatively small bond issuance belies its experimental nature, as the authorities aim to combine sustainable finance and digital/blockchain, as well as the capabilities of the existing legal and regulatory framework to handle fintech.
It will also help standardise future financial products in digital format.