A Blockchain Framework for Increased Trust in Green Bonds Issuance

https://doi.org/10.1080/20430795.2023.2275212

doi.org/10.1080/20430795.2023.2275212

20 Pages Posted: 12 Nov 2020 Last revised: 17 Oct 2023

See all articles by Vangelis Malamas

Vangelis Malamas

University of Piraeus

Thomas Dasaklis

University of Piraeus

Veni Arakelian

Council of Economic Advisors, Ministry of Finance, Hellenic Republic; UCL Centre for Blockchain Technologies

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.

Keywords: Securities issuance, digital tokens, smart contracts

JEL Classification: G-20, H-40

Suggested Citation

Malamas, Vangelis and Dasaklis, Thomas and Arakelian, Veni and Chondrokoukis, Gregory, A Blockchain Framework for Increased Trust in Green Bonds Issuance (September 16, 2020). https://doi.org/10.1080/20430795.2023.2275212, doi.org/10.1080/20430795.2023.2275212, 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)

Council of Economic Advisors, Ministry of Finance, Hellenic Republic ( email )

5-7 Nikis str
Athens, 10180
Greece

UCL Centre for Blockchain Technologies ( email )

Malet Place
London, London WC1E 6BT
United Kingdom

Gregory Chondrokoukis

University of Piraeus ( email )

80 Karaoli & Dimitriou str.
Piraeus, 18534
Greece

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