The European Investment Bank (EIB), the primary lender of the European Union, has issued the first-ever digital pound sterling (GBP) bond on a private blockchain, using Ethereum for added transparency.
The GBP 50 million (USD 86.6 million) bond was deployed on a permissioned network, built on HSBC’s tokenization platform, Orion. Although the bond was issued on a private blockchain to ensure privacy and efficiency, it was also recorded on Ethereum for transparency purposes. EIB’s new vehicle is expected to bring a range of benefits to market participants, including reduced costs, improved efficiency and real-time data synchronization.
HSBC launched Orion in November 2020, with the intent of launching a tokenized GBP bond. BNP Paribas, HSBC, and RBC Capital Markets were named as joint lead managers of the bond, with those firms serving as custodians. The EIB previously deployed a two-year, EUR 100 million (USD 110 million) bond entirely on Ethereum in April 2021.
The use of digital bonds has been gaining interest from financial institutions in various countries, including Australia, Germany, France, and Sweden since at least 2017. The Luxembourg legal framework enables firms to issue dematerialized securities using distributed ledger technology, paving the way for further exploration. EIB Vice-President Ricardo Mourinho Felix commented on the issuance of the digital bond, stating that “the time has come for further innovation in the financial sector.”
