The European Investment Bank (EIB), the investment bank owned by the EU Member States, has announced the issuance of the organizationâ€™s first-ever digital bond built on a public blockchain. The bond was issued using Ethereum and the issuance invoked $121 million two-year bonds placed with key market investors.
EIB Issues Digital Bonds Built With Ethereum Technology
The EIB, a not-for-profit organization and lending arm of the European Union announced on Wednesday that the bank has issued a new type of digital bond built using blockchain technology.
On April 28, 2021, the EIB explained that the bank had also worked on the digital bond project with the financial institutions Goldman Sachs, Santander, and Societe Generale. The EIB also disclosed that the Banque de France participated and said â€œthe payment of the issue monies from the underwriters to the EIB has been represented on the blockchain in the form of CBDC.â€
â€œInnovation at the EIB goes beyond the projects we are supporting. As a global leader in the green and sustainability bond markets, the EIB is clearly wellâ€‘placed to lead the way now in the issuance of digital bonds on [a] blockchain,â€ EIB Vice President Mourinho FÃ©lix remarked during the announcement. â€œThese digital bonds will play a role in giving the Bank a quicker and more streamlined access to alternative sources of finance to boost finance for projects across the globe.â€
The EIB is considered one of the largest backers of green finance in the world. The financial institution thinks that the digitalization of capital markets will benefit market participants in the future. Benefits include the reduction of third-party costs, transparency, and â€œfaster settlement speed.â€ A person familiar with the matter told Bloomberg that â€œthe notes have a zero percent coupon and will be registered in the public Ethereum blockchain network after pricing.â€
The EIB announcement further notes:
Blockchain to Help the Bankâ€™s Position in Capital Marketsâ€™ Innovation
The Director-General Finance at the EIB, Bertrand de MaziÃ¨res, believes this is a milestone for the European lender and thinks it cements the bankâ€™s â€œposition in capital marketsâ€™ innovation.â€ The EIB Director thinks the steps taken by the bank will pioneer more blockchain innovation when it comes to issuing financial securities.
â€œBy helping to create a framework for a new market ecosystem, the EIB believes this will bring value added for both issuers and investors, while contributing to an innovative, efficient and secure market infrastructure,â€ the EIB Directorâ€™s statement concluded.
What do you think about the European Investment Bank issuing blockchain bonds via Ethereumâ€™s technology? Let us know what you think about this subject in the comments section below.
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