Moody's: Digital bonds do have benefits in terms of settlement speed, transparency and cost savings, but risks need to be paid attention to

Odaily Planet Daily News This week, rating agency Moody’s published a paper on the cyber risks of issuing bonds using distributed ledger technology (DLT). While it acknowledges that the benefits of digital bonds include settlement speed, transparency and cost savings, the emphasis is on risks. It lists known blockchain security risks, such as attacks on the network itself and smart contract vulnerabilities. As of now, issues have not surfaced due to the low number of releases. However, the report concludes that failure can be costly for platform providers in terms of compensation, platform viability and reputational damage to the large institutions that support them. The article did not mention how this might affect Moody's ratings on digital bonds in the future. For example, SIX Digital Exchange managed a bond for the city of Lugano, which was rated by Moody’s, after spending a lot of time reviewing the SDX platform. For Lugano bonds, "different technology does not add materially higher risk compared to traditional issuance," Moody's said. (Ledger Insights)