The Bank of International Settlements (BIS) Innovation Hub in Hong Kong has announced a collaboration with the Hong Kong Monetary Authority (HKMA) and six technology firms to construct a digital infrastructure prototype that supports green investments.
This joint project, named Project Genesis, will deliver an infrastructure backbone for sustainable investment, providing greater transparency around how the proceeds of green investment initiatives are used, thereby helping the industry to meet its sustainability goals in the Asia-Pacific and globally.
Six partner companies have been selected to build the digital infrastructure for Project Genesis. Swiss-based Digital Asset will partner with GFT Technologies in Hong Kong to deploy multiple permissioned blockchains.
At the same time, “Liberty Consortium”, which involves SC Ventures, Standard Chartered and Shareable Asset, will deliver a public permissioned blockchain.
Hong-Kong start-up Allinfra will also provide technology-verified data that can track the environmental impact of these green projects in real-time.
The first green finance project to be confirmed by the BIS Innovation Hub, Genesis will support tokenisation of green bonds, enabling bond investments to be fragmented and traded in smaller denominations.
Benôit Cœuré, head of the BIS innovation hub, says: “Green and digital are not only interconnected but interdependent — the fate of one depends on the other. Green finance, accordingly, is a key priority of the BIS Innovation Hub and Genesis is an integral part of that.”
HKMA deputy chief executive Edmund Lau says: “The HKMA welcomes the collaboration with BIS Innovation Hub on this novel experimentation on the symbiosis of sustainability and tech.
“Technologies such as blockchain and smart contracts, combined with the internet of things, could streamline the bond issuance process, improve efficiency in distribution and facilitate reporting on the use and environmental impact of green bonds proceeds, thus enhancing transparency to green bond investors.”
The vision is that an investor can invest into government bonds, which will finance a green project — and, via a downloadable app or other means, the investor will be able to monitor accrued interest over the lifetime of the investment, along with how much clean energy is generated and the consequent reduction in CO2 emissions linked to the individual investment, explains Bénédict Nolens, head of BIS Innovation Hub Hong Kong.
After conducting design planning workshops, the development teams from participating entities are now working on iterative sprints (short, agile-based project stages) to build the prototypes.
The results of testing and prototype trials are expected to be published in Q4 2021.
