European Investment Bank Issues Second €100 Million Digital Bond in a Week through the Use of Central Bank Digital Currency
The European Investment Bank (EIB) has made history by issuing its sixth digital bond last week, with a value of €100 million. This digital bond was settled using the Banque de France's DL3S blockchain platform, making it the only one of the three European Central Bank (ECB) DLT settlement options that provides cash on chain.
This sixth digital bond issued by the EIB is an example of the increasing use of digital technology in traditional financial markets. It was part of the ECB's exploration of wholesale digital technology for central bank operations, specifically the ECB's wholesale DLT settlement trials in central bank money, which are set to end this month.
The Bank of Italy facilitated the issuance of this digital bond, using the Banque de France's 'exploratory cash tokens' or wholesale CBDC (wCBDC) for settlement. The digital bond settled atomically using delivery versus payment, further demonstrating the efficiency and security of this new method of bond issuance.
The sixth digital bond issued by the EIB marks the fifth and sixth time the bank has ventured into digital bond issuance. This bond is significant as it is the first to be settled using the Banque de France's DL3S blockchain platform, showcasing the EIB's commitment to innovation in the financial sector.
The sixth digital bond settled atomically using delivery versus payment, a process that ensures both the buyer and the seller receive their respective obligations simultaneously. This atomic settlement is a key feature of digital bond issuance and is expected to revolutionise the traditional bond market by reducing counterparty risk and increasing efficiency.
The sixth digital bond issued by the EIB is also noteworthy as it was the sixth digital bond to be settled atomically using delivery versus payment. This marks a significant milestone in the adoption of digital technology in the financial sector, particularly in the bond market.
The ECB's wholesale DLT settlement trials, of which the sixth digital bond issuance is a part, are set to end this month. These trials have been instrumental in exploring the potential of digital technology in central bank operations and have paved the way for further innovation in this area.
The sixth digital bond issued by the EIB is just one example of the exciting developments taking place in the world of digital finance. As more financial institutions embrace digital technology, we can expect to see more efficient, secure, and innovative financial solutions in the future.
