Blockchain, Ethereum ETH

European Investment Bank taps Ethereum blockchain for bond issuance

  • The EIB will issue its 2-year EUR100 million bond on the Ethereum blockchain tomorrow
  • The bank has partnered Goldman Sachs, Santander, and Societe Generale on this project
  • More banks could start using blockchain platforms to issue bonds

Blockchain technology has become popular amongst traditional financial institutions, thanks to its features. The European Investment Bank (EIB) is set to issue bonds on the Ethereum blockchain tomorrow.

EIB to issue bonds on the Ethereum blockchain

The European Investment Bank (EIB) is set to partner with Goldman Sachs International, Santander, and Societe Generale to issue EUR100 million bonds on the Ethereum blockchain. The bonds would be issued tomorrow, April 28.

Bloomberg reported earlier this month that the EIB has partnered with these banks to explore a digital bond issuance using blockchain technology for registration and settlements. At the time, the EIB didn’t announce the blockchain platform it intends to use. However, it seems to have chosen the Ethereum network.

The EIB will issue the EUR100 million 2-year bond on the Ethereum blockchain. The investment bank could have chosen Santander and Societe Generale because of their experience in this area. Both banks previously issued bonds on a public blockchain, with Santander handling EUR20 million while Societe Generale handling EUR140 million.

Granted, using blockchain technology to issue bonds provides numerous advantages to these banks. Blockchain technology digitizes a relatively manual issuance process, provides a shared registry without a central securities depositary, and ensures instant settlement or delivery.

Governments adopting blockchain for bond issuance

This wouldn’t be the first time a government-backed bank is issuing bonds using blockchain technology. The World Bank was one of the first to deploy it after leveraging the technology to issue bonds in Australia three years ago.

Additionally, Thailand and the Philippines have also issued treasury bonds using blockchain technology. Consequently, the numerous advantages of the blockchain technology could convince more banks to issue bonds on platforms such as Ethereum.

Banque de France says the digital bond is a CBDC esperiment

France’s central bank, Banque de France, announced yesterday that the issuance of the EUR100 million digital bond was a CBDC test. The bank stated that “In the coming months and in cooperation with the market, the Banque de France will conduct additional experimentations to assess other uses of central bank digital currency in interbank settlements.”

Several countries are already testing ways to develop their CBDCs and the central bank of France is also making its moves.

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