In the wave of digital economy, the digital bond project of the Singapore Stock Exchange has attracted much attention. Digital bonds not only represent the development of financial technology, but also an important step in the innovation of the financial market. Let us explore the significance of the digital bond project of the Singapore Stock Exchange and see how it will lead the development of the future financial market.

Digital bonds: the future of financial technology

As an outstanding representative of financial technology, digital bonds integrate advanced technologies such as blockchain technology and smart contracts, bringing new possibilities to the traditional bond market. Through digital and intelligent methods, digital bonds have achieved efficiency and transparency in bond issuance, trading, settlement and other links, greatly improving the operating efficiency of the market. This innovative financial tool not only promotes the digital transformation of the financial market, but also provides investors with more convenient and safe investment options.

The leading role of the Singapore Stock Exchange

The Singapore Stock Exchange has been committed to promoting the development of financial technology, and the launch of the digital bond project once again demonstrates its leading position in the field of financial innovation. As one of the global financial centers, the Singapore Stock Exchange has accelerated the digitalization process of the local financial market with the help of the digital bond project, attracting more attention and capital inflows from international investors. This not only enhances the international competitiveness of Singapore's financial market, but also injects new vitality into the development of the local financial technology industry.

The significance and impact of digital bonds

The emergence of digital bonds is not only the application of financial technology, but also a major change in the structure of the financial market. The cumbersome processes and high costs of the traditional bond market will gradually be replaced by digital bonds, which will greatly improve the liquidity and transparency of the bond market and promote the healthy development of the market. At the same time, the popularization of digital bonds will also provide more opportunities for small and medium-sized investors to participate in the bond market, promote the improvement of financial inclusion, and promote the healthy development of the financial market.

Future Outlook and Thinking

With the continuous advancement of the digital bond project, the financial market will usher in new development opportunities and challenges. The leading position of the Singapore Stock Exchange in the field of digital bonds will add more weight to its voice in the global financial market. The digital and intelligent financial future is coming to us. We need to continue to innovate and embrace change in order to seize opportunities, meet challenges, and jointly create a better tomorrow for the financial industry.

In the digital bond project of the Singapore Stock Exchange, we have seen the power of financial technology and felt the vitality of financial innovation. The significance of digital bonds lies not only in their technological innovation, but also in the comprehensive changes they bring to the financial market. Let us look forward to the success of the digital bond project, inject new impetus into the development of the financial market, and jointly create a better future for financial technology!

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On September 1, the Singapore Stock Exchange announced on its official website a digital bond project that had just been completed. This project was completed in cooperation with Temasek and HSBC. This article is a few points of analysis of this project.

First, this project is still a test project. It is a parallel test project outside the formal securities issuance process project. So in terms of the issuance of digital bonds, the Singapore Stock Exchange is still in the testing stage.

In 2018, JPMorgan Chase conducted a test project for bond issuance on its own Quorum (see my related article). Today, in terms of the issuance of digital bonds, Thailand has truly issued government digital bonds based on blockchain technology. So globally, Thailand is leading in the issuance of digital bonds.

Second, according to the news release of the Singapore Stock Exchange, this test project shows some advantages of the application of blockchain technology. For example, it reduces settlement risks and reduces the process from 5 days to 2 days. However, the improvements in these aspects are still very limited. It has not made a very big change to the business nature of bond issuance.

The issuers of the bonds issued this time are still the entities that can issue institutional bonds now, and investors should still be mainstream institutional investors. The application of blockchain technology should significantly reduce the overall cost of digital bond issuance, so smaller institutions should be able to issue smaller digital bonds in total.

Investors of digital bonds should also be popular among the general public. For example, the government bonds issued by Thailand in June this year reduced the face value of government bonds to one Thai baht (equivalent to 0.23 yuan). Previously, the face value of bonds issued by the Thai government was 1.000 baht. Such digital bond issuance projects can truly bring into play the advantages of blockchain technology and encrypted digital financial products, allowing ordinary participants in the market to also purchase better financial products.

Third, the payment aspect of this project uses HSBC's on-chain payment system. The press release did not specify the details of this payment system. Such a payment mechanism should be either an on-chain bookkeeping and clearing model, or a direct settlement using settlement tokens. In terms of payment and settlement, digital currency is the most effective means of payment and settlement. It can be carried out in a transaction and settlement model. The efficiency of settlement will therefore be far better than the existing bookkeeping, clearing and settlement model.

Fourth, if the underlying technical architecture is designed reasonably, this digital bond project will be very helpful in establishing the underlying infrastructure for future digital transactions. This project shows that the underlying infrastructure it uses can complete the generation, accounting and sales functions of digital financial products.

This project tests a bond-type product, but it should also be able to be used to generate equity-type digital financial products. Obviously, this project has not yet progressed to the trading process of digital financial products. But in theory, digital equity products can be generated based on the same infrastructure, and further provide a centralized matching transaction model. Testing the trading of digital financial products on the same infrastructure will become the next stage of work for the Singapore Stock Exchange.

Fifth, the significance to Singapore's CBDC. This press release does not explain the relationship between this project and Singapore's CBDC. Singapore has been developing its CBDC.
An important attribute of CBDC is interoperability. This interoperability is reflected in two aspects. One is to support the trading of digital financial products, that is, to adopt a transaction-settlement model.

The other is interoperability with CBDCs of other countries. The second aspect is not related to this project. Regarding the first aspect, it is not known whether the distributed accounting technology used in this project is the same as the underlying distributed accounting technology used by Singapore's CBDC products.

If the underlying distributed accounting technology is the same, then it is very natural to use Singapore's CBDC to trade this digital bond and all subsequent digital financial products. Settlement can be completed at the same time as the transaction, and the efficiency of the transaction will be greatly improved.