As previously reported, Goldman Sachs, Santander and Societe Generale (SocGen) helped the European Investment Bank (EIB) to issue a €100 million bond on the public Ethereum blockchain. The EIB has now confirmed yesterday’s issuance and said the settlement used central bank digital currency (CBDC) issued by the Banque de France.
Specifically, the three underwriters paid the EIB with the CBDC, but investors paid the underwriters in conventional fiat money. Societe Generale – FORGE is a participant in the Banque de France’s wholesale CBDC experiments and provided the security token issuance solution. Societe Generale previously issued its own bonds in a similar manner. However, here the investors are third parties.
“This transaction marks the EIB’s first step as a pioneer in the use of blockchain technology for the issuance of financial securities,” said Bertrand de Mazières, Director General Finance at the EIB. “By helping to create a framework for a new market ecosystem, the EIB believes this will bring value added for both issuers and investors, while contributing to an innovative, efficient and secure market infrastructure.”
One of the investors was Germany’s Union Investment. “We expect the use of blockchain in combination with tokenization to become a game changer for the industry,” said Christoph Hock, Head of Multi-Asset Trading, Union Investment.
According to Societe Generale, a second phase of the experiment involves the secondary market for the bond tokens and it will be onboarding investors for this shortly.
Linklaters advised the EIB, and SocGen credited several firms, including Linklaters, Allen & Overy, PwC France, Exaoin, and on the technology side, custody firm Ledger, ConsenSys and Nomadic Labs.
As previously noted, other governments (Philippines and Thailand) and NGOs such as the World Bank have used blockchain for bond issuance, but not public blockchains.
