EIB Launches First-Ever Sterling-Denominated Digital Bond on Blockchain
The European Investment Bank (EIB) launched its first-ever pound sterling-denominated digital bond. The bank continues to show interest in blockchain-based bond issuance.
The European Investment Bank (EIB) launched its first-ever pound sterling-denominated digital bond using blockchain technology. The bank published a post on Jan. 31, highlighting that it is “continuing to spearhead market developments in the digitalization of capital markets with a fully digitally native bond issuance in pound sterling.”
The bonds are worth £50 million, or about $61.5 million. They bear a floating interest rate and are registered on a private blockchain. There is also a public blockchain mirror that provides increased transparency on an anonymized basis.
The digital bond is accessible via HSBC Orion, the bank’s tokenization platform. The bank stated that the benefits would include reduced costs, improved efficiency, and real-time data synchronization. BNP Paribas, HSBC, and RBC Capital Markets distribute the system’s architecture.
ECB Vice-President Ricardo Mourinho Felix celebrated the event, saying,
“… The time has come for further innovation in the financial sector, and we are pleased to issue the first digital bond in pound sterling on a private and public blockchain with the support of our counterparts. This new financial tool will provide additional capital flow that the EIB will invest in projects with global impact.”
EIB Continues Its Foray Into Blockchain-Based Digital Bonds
The EIB has issued digital bonds on a blockchain before. In April 2021, the bank issued a $100 million 2-year bond using blockchain technology. The issuance took place in partnership with Banque de France. Specifically, it issued $121 million in digital notes using Ethereum.
In the last quarter of 2022, the bank announced Project Venus, the first euro-denominated digital bond on a private blockchain. EIB is certainly keen on leveraging the technology, as are other established financial institutions.
Established Institutions Tapping Into Blockchain Technology
Several established banks and financial institutions are tapping into blockchain technology. In November 2022, Hong’s financial authorities announced they would issue the world’s first tokenized government green bonds. They followed up by saying it would issue tokenized green bonds for institutional investors.
The Bank for International Settlements (BIS), the Hong Kong Monetary Authority, and the United Nations Climate Change Global Innovation Hub are also working on green bonds. Meanwhile, the National Australia Bank stated that it would issue a green stablecoin.