Digital or tokenized bonds, which are becoming popular in global markets, could lower transaction expenses and make capital markets more accessible by letting organizations bypass intermediaries like banks and by increasing liquidity on the secondary market, the report said. Hong Kong’s central bank arrived at similar conclusions following a successful $100 million tokenized bond issue from earlier this year.
DLT could also enable some businesses to capture untapped revenue opportunities and enter new markets.
Although the effects of employing these new technologies in finance will likely be positive, “they will vary greatly by country, region, company, and worker, with some suffering from technology-driven disruption,” the report said.
The technology’s promise, however, comes with drawbacks such as potentially challenging sovereign authority and fueling tax evasion, money laundering and terrorism if not used and regulated well.
Moody’s said it plans to track how technological transformation in financial markets fueled by AI and DLT could affect credit risk stemming from borrowers failing to repay loans.
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- Source: https://www.fintechnews.org/blockchain-and-ai-are-set-to-transform-financial-markets-moodys/
