China Construction Bank (CCB), the world’s second-largest bank has issued bonds valued at the US $ 3 billion on the blockchain through the Fusang Digital Asset Exchange in Hong Kong.
Tokenized bond certificates will be issued within three months through a branch of the state-owned bank Labuan, Malaysia, according to a report in the South China Morning Post on Wednesday.
It is worth noting that digital securities will be convertible to Bitcoin (BTC, + 0.21%) on the Fuso Exchange and in the US. Dollar. The transaction is scheduled to begin on Friday.
World’s Second Largest Bank to Work With Other Banks
Fusang Group’s CEO Henry Chong said in the report that if successful, Fusang plans to work with the “big four” Chinese banks to issue certificates in other currencies, including the renminbi.
With the issue of blockchain, CCB – the second largest bank in the world by market capitalization – wants to reduce the costs traditionally associated with financial intermediaries. Debt securities are also being offered at lower prices for retail investors to take advantage of.
Bonds are tradeable debt securities issued by governments or corporations to support spending commitments. Chinese bonds typically trade at tens of thousands of yuan (over $ 4,000), which means they are primarily available to institutional and professional investors.
The bank aims to reduce this barrier to entry by providing usable credentials of at least $ 100. The report says they will deliver around 0.75% yield to maturity – higher than the 0.25% average annual interest other banks make.