The European Investment Bank (EIB) has announced the issuance of its first-ever sterling-denominated digital bond, leveraging both public and private blockchains.
According to EIB, the digital bond worth £50 million ($61.60 million) was delivered in collaboration with BNP Paribas, HSBC and RBC Capital Markets, the bank revealed in a blog post on January 31.
In the transaction, EIB stated that UK banking giant HSBC was the account keeper involved in recording transactions leveraging its HSBC Orion platform. Elsewhere, BNP Paribas Securities Services business, RBC, alongside HSBC, will act as custodians for existing clients who opt for the digital bond.
Under the transaction, the private blockchain was used to record legal ownership of the digital bonds alongside offering an operational framework. Elsewhere, the public blockchain is leveraged for information purposes and enhanced investors’ transparency.
Benefits to market participants
The EIB pointed out that the rollout of the digital bond is part of the institution’s overarching goal of ensuring market participants have access to products with reduced costs while improving efficiency and promoting real-time data synchronization for involved parties.
Notably, the bond follows a prior sale by the bank involving euro-denominated digital bonds. In this line, EIB Vice-President Ricardo Mourinho Felix stated that the approach compliments the need for innovation in the financial sector.
“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,” Mourinho said.
It is worth mentioning that more banking institutions are opting for blockchain technology to offer several products. Notably, the technology is viewed as an ideal product for banks that are skeptical about dealing with cryptocurrencies directly.
However, several banks are increasingly showing the intention to venture into the cryptocurrency sector amid increasing demand. For instance, as reported by Finbold, HSBC revealed its entry into the crypto world by announcing job openings in tokenization and developing a digital asset strategy.