By George Ward
Earlier in the week, the EIB (European Investment Bank) announced that it had introduced its first Pounds Sterling-based digital bond employing blockchain technology.
In addition, the bank said the native bond would help to foster digital developments in the capital markets.
EIB Highlights Benefits Of The Digital Bond
The value of the bonds is £50 million (approximately $61.5 million). Also, the bonds the EIB launched on a private blockchain have a floating interest rate.
A mirror version on a public blockchain is also available, offering heightened transparency while maintaining anonymity. Entities can access digital bonds through HSBC Orion, the bank’s platform for tokenization.
According to the bank, the benefits of the digital bond include reduced costs, increased efficiency, and the ability to synchronize data in real time. The companies that distribute the system’s architecture include RBC Capital Markets, HSBC, and BNP Paribas.
Ricardo Mourinho Felix, the Vice President of the EIB, while celebrating the milestone, said:
“It is a crucial time for advancement in the financial industry, and we are proud to announce the issuance of the first-ever Pounds Sterling-based digital bond. It is supported by our counterparts and recorded on a public and private blockchain.”
Felix added that this innovative financial instrument helped increase capital flow for the EIB. He said the bank would use the capital to fund projects that would have a global impact.
It is not the first time the EIB has released digital bonds. Last April, the bank issued a two-year bond worth over $100 million utilizing blockchain technology.
At the time, the bank partnered with the Banque de France to facilitate the issuance. Both entities issued over $121 million in digital notes using the Ethereum blockchain.
Financial Institutions Embracing Blockchain Technology
In Q4 2022, the EIB unveiled a new initiative called Project Venus. This project was the bank’s first Euro-based digital bond launched on a private network.
The numerous blockchain-based projects undertaken by the EIB last year show that the bank is bullish on blockchain technology. Similarly, several well-established banks and financial organizations are exploring blockchain technology.
They have woken up to the usefulness of blockchain technology. Last November, Hong Kong’s financial authorities declared their intention to release the first-ever tokenized green bonds backed by the government.
They further stated that they would offer tokenized green bonds for institutional investors. Meanwhile, the UN Climate Change Global Innovation Hub, the Hong Kong Monetary Authority, and the BIS (Bank for International Settlements) are also considering releasing green bonds.
Also, the National Australia Bank announced last year that it intends to release a green stablecoin.