The European Investment Bank Introduces Its First-ever Digital Bond

The European Investment Bank (EIB) has made public its plans to issue its first digital bond denominated in sterling, using a combination of public and private blockchains.

European Investment Bank EIB has set the value for its inaugural £50 million digital bond. The bank will utilize a mix of private and public blockchains through HSBC Orion. The subject move comes after implementing a Luxembourg legal framework for issuing, transferring, and maintaining digital securities on a distributed ledger technology infrastructure.

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The private blockchain, with encryption, maintains a record of the ownership of the digital bonds and manages the operations for the floating rate instrument. While, the public blockchain serves as an informational tool and offers increased transparency to investors and the market. 

The digital securities accounts will store the digital bonds on HSBC Orion and BNP Paribas Securities Services. In comparison, RBC and HSBC will act as custodians for clients who invest in this digital bond.

Eureapon Investment Bank Objective To Issue Digital Bond

The EIB stated that the release of the digital bond objective is to provide market participants with value-added products. Those products should be more cost-effective, enhance efficiency, and enable real-time data synchronization for all parties involved.

It’s worth mentioning that this bond comes after the EIB’s previous sale of digital bonds denominated in euros. EIB Vice-President Ricardo Mourinho Felix noted that this move aligns with the need for innovation in the financial industry.

Mourinho, EIB vice president, stated:

“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 an additional capital flow that the EIB will invest in projects with global impact,”.

Blockchain is a decentralized and digital ledger of transactions that uses advanced cryptographic techniques and involves a network of participants. The participants collectively validate the transactions organized and added to the catalog in blocks (hence the term “blockchain”). This combination of features primarily aims to increase security and efficiency without a centralized registry to keep track of bondholders.

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