Use cases | Capital Raising Contingent Convertible (“CoCo”) Bonds Summary Financial Utilizing smart contracts to Institution automate regulator reporting can minimize the need for point-in- Regulator time stress tests, reduce market volatility and, ultimately, increase “CoCo” bond issuance Investor Implications for FIs • Tokenizing bond instruments when soliciting capital from investors can enable them to make informed, data-driven decisions • Smart contracts can alert regulators when loan absorption needs to be activated, minimizing need for point-in-time stress tests • Providing investors with transparency into loan absorption can reduce uncertainty currently associated with “CoCo” bonds Critical conditions for implementation • Standardizing attributes for soliciting investments • Streamlining trigger calculations across FIs • Developing processes to act on real-time trigger notifications WORLD ECONOMIC FORUM | 2016 42