The European Investment Bank (EIB), the investment bank owned by the EU Member States, has announced the issuance of the organization’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 “the payment of the issue monies from the underwriters to the EIB has been represented on the blockchain in the form of CBDC.”
“Innovation 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 well‑placed to lead the way now in the issuance of digital bonds on [a] blockchain,” EIB Vice President Mourinho Félix remarked during the announcement. “These 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.”
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 “faster settlement speed.” A person familiar with the matter told Bloomberg that “the notes have a zero percent coupon and will be registered in the public Ethereum blockchain network after pricing.”
The EIB announcement further notes:
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