The Central Bank of Colombia (Banco de la República), IDB Group and Banco Davivienda have launched the pilot of Colombia's first blockchain bond. 

According to an official statement by Banco de la República, the bond will be issued, placed, traded and settled on blockchain technology through the use of smart contracts for the Colombian securities market. 

IDB Group is composed of the Inter-American Development Bank, the Inter-American Investment Corporation and the Multilateral Investment Fund.

The pilot program “seeks to verify the benefits of this new technology in the life cycle of a security, from issuance to maturity,” and is expected to last six months, Banco de la República added. 

Banco Davivienda, a Colombian bank based in Bogotá, will issue the bond and IDB Invest will underwrite the entire issue. The statement added that the operation will be recorded in LACChain, a platform launched by BID Lab, “leaving the complete traceability of the bond in blockchain technology.”

The money under the pilot program will be processed by the payment system of Banco de la República, which will act as an observer node in the blockchain network. 

IDB Group will contribute technical support for the implementation of the proof of concept, and will offer advice on both regulatory and technical aspects of the operation, the statement added.