Blockchain securitization: an innovative technology to boost asset liquidity

Abstract

The main aim of this paper is to show the potential benefits for the Securitisation process, both in terms of the setup of operations and in the entire product life cycle, derived from the adoption of the Blockchain Technology. For this purpose, we focused on the different aspects, starting from the securitisation market in which we analysed the causes of the decrease in the number of operations occurred in the last decade, although there still is a strong need to securitise some types of assets such as NPL’s and Trade Receivables. Specifically, for these two types of assets we represent the securitisation process with the As-Is limits and improvements made possible by the blockchain technology application. Along this “path” we have deepened some key aspects of the blockchain and how the application of this technology may help Financial Institutions to experience a strong reduction in operational risks and costs, liquidity risk and credit risk on managing the underlying assets. At the same time, the new framework might give to a wider category of individuals access to a product that otherwise would have been available only to a limited number of more sophisticated investors, tapping from more structured, controlled and certified information. All this being achieved at no additional costs but rather with stronger and more organized and transparent product structures.

Keywords

• blockchain benefits
• securitisation process
• sts framework
• npl
• trade receivable
• illiquid asset
• data quality
• data security
• data certification (oracles)
• dlt
• smart contract