Morgan Stanley backs AI bond market as debt enters blockchain era

• Morgan Stanley says artificial intelligence could help reshape bond markets.
• The bank believes AI and tokenisation can improve debt trading and issuance.
• The technology could make bond markets faster, cheaper and more efficient.

Morgan Stanley says artificial intelligence and blockchain technology could transform global bond markets by making debt issuance and trading more efficient.

The bank believes AI can automate many tasks across the bond market, while tokenisation could simplify how debt securities are issued, settled and managed.

"There is a significant opportunity to modernise fixed-income markets through AI and tokenisation," Morgan Stanley analysts said.

Bond markets remain one of the world's largest financial sectors, but many processes still rely on manual workflows and ageing technology.

Tokenisation converts traditional financial assets into digital tokens on a blockchain, allowing transactions to be completed more quickly and with greater transparency.

Morgan Stanley said combining AI with tokenised assets could lower costs, reduce settlement times and improve access to fixed-income markets.

The report highlights growing interest among major financial institutions in using blockchain and artificial intelligence to modernise traditional financial infrastructure.