The Bank for International Settlements published a BIS Bulletin assessing the case for tokenising government bonds and outlining key design choices for issuance and collateral arrangements. Based on a market that remains small at around USD 8 billion of issuance to date, it finds early evidence that tokenised bonds can trade with tighter bid-ask spreads than comparable conventional bonds, while issuance costs appear broadly similar, with broader adoption dependent on resolving regulatory and infrastructure challenges. The analysis draws on a data set of 39 tokenised bonds, including 15 issued by governments or supranationals and 24 by corporates, and matches tokenised bonds with conventional bonds from the same issuer with the same currency and coupon type. In the matched sample, the mean bid-ask spread is about 19 basis points for tokenised bonds versus 30 basis points for conventional bonds, issuance costs measured by underwriting spreads do not differ systematically, and minimum investment amounts are lower on average (USD 110,000 versus USD 185,000). The Bulletin highlights two broad issuance models, native issuance on a programmable platform and conventional issuance followed by tokenisation backed by custody arrangements, and discusses collateralised issuance variants ranging from off-platform collateral management to on-platform tokenised collateral that could enable automated collateral transfers and support use cases such as tokenised repos and central bank operations. It concludes that potential efficiency and access gains will depend on platform scalability, legal and regulatory clarity, and the build-out of supporting market infrastructure, with further experimentation needed to clarify benefits, risks and operational limits.

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