Catastrophe bonds: blockchain settlement is neat and efficient

Washington

FINANCIAL markets are showing some signs of volatility these days after exceptionally low indicators since the start of the 2017. The Chicago Board Options Exchange Volatility Index, or VIX, is at its highest level this year. The VVIX Index, which measures the volatility of volatility, is higher than it has been since August 2015.

Rising volatility does not mean catastrophe is imminent. There is one asset class, however, that takes a literally catastrophic view on the future, and it is booming: catastrophe bonds. The World Bank recently issued its largest-ever cat bond, offering as much as US$360 million in payouts to Mexico in the event of tropical cyclones and earthquakes.