The inaugural digital bond issuance on the blockchain has been successfully executed by Intesa Sanpaolo, Italy’s most significant financial group, and Cassa Depositi e Prestiti SpA (CDP), an Italian state-owned bank. The security was issued through the Polygon (MATIC) blockchain.
The €25 million digital bond has a fixed coupon of 3.633% at annual maturity and four months.
According to an official statement, the issuance is part of a broader European Central Bank (ECB) trial. The European Central Bank established an initiative to evaluate wholesale fiat money settlement methods on blockchains.
Additionally, the Bank of Italy’s TIPS Hash Link solution was employed to facilitate the payment in central bank money. It facilitates communication between conventional payment systems and blockchains.
“This transaction is a significant milestone for CDP in the capital market innovation sector, as it marks the pioneering use of blockchain technology for bond issues,” stated Fabio Massoli, CDP’s director of administration and finance.
The project will adhere to the new legal and regulatory framework to establish a new technological paradigm for digital bond issuance.
Tokenizing Conventional Financial Instruments, including Funds, Bonds, and Credit
Asset managers and global financial institutions are increasingly exploring the potential of tokenizing traditional financial instruments like bonds.
This is primarily due to the approach’s objective to achieve operational benefits, including transparent, expedited, and low-cost transaction settlements.
For example, BlackRock, the world’s largest asset manager, initiated asset tokenization in March by introducing a digital liquidity fund.
Niccolò Bardoscia, the director of digital assets trading and investments at Intesa Sanpaolo, thinks that public blockchains are a “powerful technology” that banks can use to expedite and secure transactions.
Bardoscia stated that tokenization creates a new standard for automation and efficacy in financial markets.
“Over the next few years, this technological shift will affect not only bonds but all asset classes.
