2026 Perspectives for the Public Sector

Investors Demand & Market Color Investors have a natural interest in innovation and improving efficiencies in the settlement process, both in primary and secondary markets. It has been challenging to implement comprehensive end-to-end change across the settlement process due to the number of different actors involved in the chain. The DNN is an example of innovation in primary markets which eased adoption for investors, as they could participate on legacy rails. As an aside, secondary markets are already quite efficient with settlement timelines of T+1 or T+2 business days being commonplace. Investors focus chiefly on interoperability and liquidity, which are connected but not necessarily the same. The vast majority of investors will select an instrument for economic reasons, not due to the settlement mechanics. Thereafter, investors prioritize liquidity. Innovative structures that work and are interoperable across platforms are therefore preferred to traditional structures. As an example, while the AIIB issued its DNN on Euroclear’s D-FMI, it can also clear on the Hong Kong Monetary Authority’s Central Moneymarkets Unit (CMU) and SDX. Investors are interested in exploring new solutions, but most of them are likely to focus on structures that offer long-term adaptability. A more limited number of investors will have the bandwidth to engage in proof-of- concept type transactions. The Post-Issuance Phase: Custody Gets Smarter In the realm of custody, the true revolution brought by digital bonds stems directly from the nature of the digital asset itself. A tokenized bond is fundamentally a smart security with embedded logic that enables the automation of complex post-issuance processes. This embedded intelligence facilitates on-chain atomic settlement (or DvP), a critical innovation that allows the simultaneous exchange of the bond and its corresponding payment. This capability drastically reduces counterparty risk and enables significantly faster settlement times. Furthermore, the automation of coupon payments and other corporate actions, executed autonomously by smart contracts, delivers unprecedented levels of efficiency, and the mitigation of operational complexities that have long plagued traditional bond markets. While the smart security nature of tokenized bonds promises greater efficiency and lower risk, central banks and supranational entities still face a critical infrastructure question: determining how to receive payment for, and service, digital bonds. For atomic settlement —where the bond and payment are exchanged simultaneously — to function effectively, a reliable tokenized form of money must either exist on the same distributed ledger as the tokenized bond or be seamlessly integrated with it through sophisticated solutions like Hashed Timelock Contracts (HTLCs). This is essential to ensure a robust digital settlement asset. Most Significant Changes in the Post-Trade Space 0 10 20 30 40 50 2025 2024 2023 Adoption of generative AI Settlement efficiency (CSDR) Automation of asset servicing Adoption of digital assets Accelerated settlements (to T+1) 24% 12% 6% 10% 32% 13% 9% 10% 41% 20% 12% 9% 5% Note: [1] Survey question—What do you consider to be the most significant changes in the post-trade space today—based on impact to your business? [2] Total 537 market participants across asset managers (23%), broker-dealers (22%), banks (20%), institutional investors (18%), custodians (14%) and others (3%). [3] Adoption of Generative AI is a new response category in the 2025 survey. [4] Others include (a) Increased shareholder participation and governance; (b) Resiliency (incl. DORA); (c) Replacement of FMI legacy technology platforms; (d) Mandatory fixed income clearing; (e) WHT refund automation; (f) Adoption of APIs and bespoke bilateral channels; (g) Adoption of new standards; (h) Real-time payments, 24x7; (i) Increasing retail participation in capital markets. Source: The Future of Post-Trade 52 Tokenizing Public Sector Debt: Reimagining the Bond Lifecycle from Issuance to Custody