The Bank for International Settlements (BIS) published a bulletin exploring tokenized government bonds, finding that they tend to have tighter spreads compared to conventional bonds, though issuance costs remain comparable.
The study examined 15 bonds issued by sovereigns, supranationals and agencies worth $1.9 billion, a small fraction of the $80 trillion government bond market. The mean bid-ask spread on tokenized bonds was 19 basis points compared to 30 for conventional bonds, suggesting better liquidity.
This improved liquidity may stem from several factors. Multiple issuance platforms have integrated with local central securities depositories, allowing mainstream institutional investors to access the bonds. There’s also anecdotal evidence of investor interest in tokenized bonds for experimental purposes. Additionally, the minimum investment amount averages $110,000 versus $185,000 for traditional issuances. These lower minimums likely encourage broader participation, contributing to tighter spreads.
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