A major fixed income investment manager has quit his role to join a crypto advisory firm and believes government bonds won’t exist in a decade.
Vimal Gor was previously Pendal’s head of bond, income and defensive strategies but has joined crypto firm Trovio where he will lead the company’s digital asset funds.
He believes digital currencies issued by central banks will let governments tap into pools of liquidity in “decentralised finance” to raise debt.
“I’ve been sitting talking about the dollar/yen for 30 years and, believe me, it’s very boring,” Mr Gor said.
“Bonds are largely useless in portfolios now and no one will want to buy them as their yields stay depressed, so they won’t be great for governments wanting to raise debt.
“But within 10 years, central banks will have issued their own digital currencies that can access decentralised finance lending pools, which means they won’t have to raise debt from the bond market.
“Bonds won’t exist in 10 years, and the trillions of dollars of bonds we have won’t trade because we’re moving to a world where central banks will set interest rates for people via central bank digital currencies.”
Recently US President Joe Biden released an executive order encouraging the Federal Reserve to explore a US central bank digital currency as a matter of “the highest urgency”.
The Reserve Bank of Australia is also researching central bank digital currencies.
Project Atom was a collaborative research project undertaken during the past year that examined the potential use and implications of a wholesale form of central bank digital currency using distributed ledger technology.
The project involved the development of a proof-of-concept ( for the issuance of a tokenised form of CBDC that could be used by wholesale market participants for the funding, settlement and repayment of a tokenised syndicated loan on an Ethereum-based DLT platform.
