By utilising both public and private blockchains, the European Investment Bank (EIB) has announced the release of its first-ever digital bond denominated in sterling.
EIB stated in a blog post on January 31 that the digital bond, which was provided in partnership with BNP Paribas, HSBC, and RBC Capital Markets, was valued £50 million ($61.60 million).
According to the transaction, HSBC, a major UK bank, served as the account keeper and was using its HSBC Orion platform to record transactions. RBC, HSBC, and BNP Paribas Securities Services will also serve as custodians for current clients who choose the digital bond.
In the transaction, a framework for operations and a record of legal ownership of the digital bonds were both provided by the private blockchain. The open blockchain is used elsewhere to improve investor transparency and serve informational needs.
The EIB noted that the launch of the digital bond is a component of the organization’s larger objective to guarantee that market players have access to goods at lower costs while enhancing efficiency and encouraging real-time data synchronisation for interested parties.
Notably, the bond comes after a prior sale by the bank of digital bonds with euro as the base currency. Ricardo Mourinho Felix, vice president of the EIB, said in this sentence that the strategy complements the need for innovation in the financial sector.
“With the backing of our colleagues, we are thrilled to issue the first digital bond in pound sterling on a private and public blockchain. The timing is right for more innovation in the financial sector. The EIB will spend additional resources through this new financial mechanism in initiatives with a global impact, according to Mourinho.
It is noteworthy that more banking organisations are choosing blockchain technology to provide a range of products. Notably, the technology is thought to be the perfect solution for institutions who are wary of working directly with cryptocurrencies.
However, given the rising demand, more and more banks are indicating their plan to enter the bitcoin market. For instance, according to Finbold, HSBC announced job openings in tokenization and the creation of a digital asset strategy to signal its entry into the cryptocurrency industry.