Tokenized Bonds

Definition ∞ Tokenized Bonds are traditional debt securities that have been digitally represented on a blockchain. This process involves converting the rights and obligations of a bond into a digital token, allowing for fractional ownership and automated management through smart contracts. Tokenization can enhance liquidity, reduce settlement times, and lower administrative costs compared to conventional bonds. It provides a novel way to issue and trade fixed-income instruments.
Context ∞ Tokenized bonds are a growing area of interest in institutional finance, as traditional markets explore the efficiencies of blockchain technology. News frequently reports on major financial institutions and governments issuing tokenized bonds for various purposes, from public debt to corporate financing. The discussion centers on the regulatory clarity required, the interoperability with existing financial infrastructure, and the potential for greater market access and transparency.