A Block-Chain Framework for Increased Trust in Green Bonds Issuance

20 Pages Posted: 12 Nov 2020

See all articles by Vangelis Malamas

Vangelis Malamas

University of Piraeus

Thomas Dasaklis

University of Piraeus

Veni Arakelian

Piraeus Bank

Gregory Chondrokoukis

University of Piraeus

Date Written: September 16, 2020

Abstract

Bonds issuance is a highly technical and complicated process, entailing mutually untrusted stakeholders with sometimes conflicting objectives. Currently, the global bond market is faced with several pain points when it comes to bond issuance, like disparate regulatory frameworks, limited traceability and auditability, settlement failures, and inefficient issuance processes. Block-chain technology is capable of addressing some of the issues mentioned above. In this paper, we propose a block-chain-enabled green bond issuance architecture. In particular, we develop an adaptable and efficient system that reduces the intermediary costs and offers compliance, scalability, confidentiality, and security. The block-chain-enabled system also acts as a transparent yet fully controllable decentralized authority where the funds of qualified, environmentally friendly projects could be traced. Our proposed architecture considers the various aspects and the complexity of the bond issuance procedures and the special requirements of green bonds. The architecture is based on a five-step model from green bond initialization to archiving. To adjust the processes of bond issuance to a block-chain-enabled model, we use digital tokens based on the ERC-20 token standard. Within the smart contracts developed, we use various functions to handle the prerequisites of validators and regulators’ approval based on the documentation presented and the parameters of rate and maturity requested by the issuer. We use a separate smart contract to implemented forensic services. The overall system also considers various regulatory compliance instruments and enhances access of regulatory bodies to issuance records. We believe that the proposed architecture could be of significant value to researchers and practitioners from the financial domain.

JEL Classification: G-20, H-40

Suggested Citation

Malamas, Vangelis and Dasaklis, Thomas and Arakelian, Veni and Chondrokoukis, Gregory, A Block-Chain Framework for Increased Trust in Green Bonds Issuance (September 16, 2020). Available at SSRN: https://ssrn.com/abstract=3693638 or http://dx.doi.org/10.2139/ssrn.3693638

Vangelis Malamas

University of Piraeus ( email )

80 Karaoli & Dimitriou str.
Piraeus, 18534
Greece

Thomas Dasaklis

University of Piraeus ( email )

80 Karaoli & Dimitriou str.
Piraeus, 18534
Greece

Veni Arakelian (Contact Author)

Piraeus Bank ( email )

Vasilissis Sofias 94 & Kerasountos 1
Athens, 11528
Greece
11528 (Fax)

Gregory Chondrokoukis

University of Piraeus ( email )

80 Karaoli & Dimitriou str.
Piraeus, 18534
Greece

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
724
Abstract Views
2,039
Rank
54,068
PlumX Metrics