Slovenia Issues First-Ever Sovereign Digital Bond in the EU

YEREVAN (CoinChapter.com) — Slovenia has issued the first sovereign digital bond in the European Union. The bond is valued at 30 million euros ($32.5 million) with a 3.65% interest rate. It was settled through the Bank of France’s tokenized cash system. This bond is part of the European Central Bank’s (ECB) money settlement experimentation program.

The bond, maturing on November 25, settled on-chain using a wholesale central bank digital currency (CBDC). Wholesale CBDCs are digital tokens for financial institutions rather than individual consumers. This development marks a significant advancement in the EU’s financial technology landscape.

ECB’s Initial CBDC Settlement Tests Pave the Way for Future Innovations

The European Central Bank completed its first test of wholesale CBDC settlement in May. Austria’s central bank conducted the initial experiment, focusing on the tokenization and simulated delivery-versus-payment settlement of government bonds. This was done in a secondary market transaction against central bank money.

The ECB will conduct more trials and experiments in the coming months. By doing so, they aim to explore the potential of distributed ledger technology (DLT) to enhance the transparency and efficiency of financial markets. Meanwhile, the Slovenian government emphasized the importance of these initial transactions as a stepping stone to broader technology adoption.

BNP Paribas Facilitates Slovenia’s Groundbreaking Digital Bond Issuance

BNP Paribas played a crucial role in Slovenia’s issuance of a sovereign digital bond. They acted as the global coordinator and sole bookrunner. Additionally, they operated the distributed ledger technology platform, Neobonds. This platform is BNP Paribas’ private tokenization platform, built using Digital Asset’s Daml and leveraging the Canton blockchain.

Furthermore, BNP Paribas’ involvement shows the collaboration between traditional financial institutions and digital technologies. The bond was settled through the Bank of France’s tokenized cash system as part of the ECB’s experimental framework. This move signals a shift towards more transparent and efficient financial markets. Consequently, Slovenia’s action sets a precedent for other EU member states to explore similar digital initiatives. This reflects a broader trend towards adopting distributed ledger technology in the financial sector.

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