IDB Group, Banco de la República and Davivienda Launch Pilot Blockchain Bond in Colombia
- This is the first time that blockchain technology has been implemented for the issuance, placement, negotiation and pricing of a bond in Colombia.
- The pilot has been authorized in LaArenera, the sandbox operated by Supervisor of the SFC, which supports financial innovation in the Colombian capital market.
IDB Group and Banco Davivienda have launched the first bond issued, placed, negotiated, cleared and settled in blockchain technology through the use of smart contracts for the Colombian securities market.
This pilot deal will be the first step towards the implementation of this technology in the placement, negotiation and pricing of deals with such instruments in the capital market, where Davivienda will issue the bond and IDB Invest will subscribe the entire issue. The bond will be listed on the high-value payment system of the Banco de la República.
This innovative pilot seeks to verify the benefits of this new technology in the life cycle of a security, from issuance to expiration. The benefits include a potential reduction of operational costs, faster processing, greater efficiencies in the traceability and security of operations, the elimination of information asymmetries and a better management of financial risks, among others. All this contributes to a more efficient and integrated stock market while protecting investors.
Davivienda is reinforcing its leadership in the issuance of bonds in Colombia, being the first bank to link advanced blockchain technology to guarantee security, monitoring and transparency in its products and services. The bank has made significant investments in infrastructure and equipment, ensuring for its users simple, trustworthy, friendly and transformative experiences that make Davivienda a benchmark in digital banking in the region.
The IDB Group will contribute technical support for the implementation of the proof of concept, with advice on both regulatory and technical aspects relevant to the structuring of the bond in blockchain technology. Additionally, the LACChain platform, launched by BID Lab, will handle the issuance, placement, negotiation and pricing, leading to the bond’s full traceability in blockchain technology.
With a proof of concept that may last about 6 months, Davivienda and the IDB Group seek to create a commercial, operational, technological and regulatory framework that may handle “real” operations of debt instruments through blockchain technology and the use of smart contracts.
The Banco de la República will act as an observer node in the blockchain network. Their participation in the technological experiment seeks to get a better understanding of the process of issuing and trading securities in a decentralized way in blockchain technology in the primary and secondary market, as well as the operational challenges of the project and the regulatory needs.
About the IDB Group
The Inter-American Development Bank is the main source of financing for development in Latin America and the Caribbean. The group helps improve lives by providing financial solutions and development expertise to private and public sector clients. The group is made up of the IDB, which has worked with governments for 60 years; IDB Invest, which collaborates with the private sector; and IDB Lab, which experiments with innovative ways to drive more inclusive growth.
About Banco Davivienda
At Davivienda we believe in a financial world that simplifies the lives of people, communities, businesses and cities. As a result, today we are a team of more than 17,200 people in Colombia, Panama, Costa Rica, Honduras, El Salvador and Miami, innovating, investing in knowledge, talent and technology, collaborating and seeking to implement the best practices worldwide. We do all of this to offer everyday solutions and exclusive offers to more than 18.0 million customers, enabling greater financial inclusion and sustainable development. We are currently the second largest bank by portfolio in Colombia, with a network of 673 branches and about 2,719 ATMs in Colombia and in our international subsidiaries. We are part of Grupo Bolívar.
About Banco de la República
The Banco de la República is an independent body from the other branches of public power, enjoying administrative, patrimonial and technical autonomy, while subject to its own legal regime and exercises the functions of central banking. Its mission is to contribute to the well-being of Colombians by preserving the purchasing power of the currency, supporting sustained economic growth, contributing to financial stability, the proper functioning of payment systems and adequate cultural management.