- Colombia’s Central Bank has announced its participation in the country’s first blockchain bond pilot program
- According to the Central Bank of Colombia’s official announcement, these benefits could include a possible reduction in operational costs
- Lacchain, IDB’s blockchain platform built to enable this type of application, will be used to issue and manage the bonds
Colombia’s Central Bank has announced its participation in the country’s first blockchain bond pilot program, alongside the Interamerican Development Bank (IDB) and Davivienda, a private commercial bank. The IDB’s Lacchain blockchain platform, which will handle the operative element of the issuance, will be used for the proof of concept.
Colombia’s Central Bank has joined a blockchain bond pilot program
Colombia’s Central Bank has announced its involvement in the country’s first blockchain bond program. This pilot program, which was issued by Davivienda, one of Colombia’s most major commercial banks, with assistance from the Interamerican Development Bank (IDB), aims to investigate the merits of the new technology and its applicability for future bond issuances.
These benefits would include the potential reduction of operational costs, the optimization of process times, greater efficiencies in the traceability and security of operations, the elimination of information asymmetries, and better risk management, according to the official announcement from the Central Bank of Colombia.
Lacchain, IDB’s blockchain platform built to enable this type of application, will be used to issue and manage the bonds. The central bank’s duty will be to maintain a blockchain observation node and assist issuance in its high-value payments system.
Colombians are embracing blockchain technology
While Colombia has not been noted for its early adoption of cryptocurrencies or blockchain, the government is gradually adopting these new technologies into its financial system. In February, the country’s financial watchdog, the SFC, approved the creation of a regulatory sandbox that permitted select banks to form alliances with exchanges to handle cryptocurrency purchases in a cooperative effort. This round of institutions also included Davivienda, the bank that is participating in the blockchain bond trial.
The goal of creating this sandbox is to learn more about how cryptocurrency systems may collaborate with traditional financial systems to create regulations that reflect this new paradigm. This suggests that Colombian regulators see cryptocurrency as having the capacity to influence the country in the future. The retail bitcoin market in Colombia, on the other hand, is limited and does not have the same clout as it does in other countries in the region, such as Venezuela or Argentina.