Belgium-based financial services company Euroclear has collaborated with the World Bank to pioneer the first issuance of a fully digital bond on the Luxembourg Stock Exchange. This €100 million digitally native bond uses distributed ledger technology (DLT) to enable the distribution and settlement of digital financial assets.
The World Bank’s inaugural issuance of these digitally native notes (DNNs) on blockchain represents a critical advancement in Euroclear’s ongoing efforts to transition its financial market infrastructure into one that is fully digital and data-enabled. By leveraging R3’s Corda enterprise blockchain, the DNN issuance establishes a scalable framework that combines the advantages of digitization, such as efficiency and transparency, with the accessibility and liquidity of traditional bond markets.
Throughout the blockchain-based process for issuing these digital securities, Citi Group’s Issuer Services division acted as the agent for issuance and payments. Canadian investment bank TD Securities took on the role of dealer for the DNN issuance.
Last year, the Luxembourg Stock Exchange gained recognition as the first European exchange to admit digital bonds, starting with three digital securities issued by Société Générale followed by the European Investment Bank. This latest issuance of digital notes by the World Bank reinforces the potential for DLT technology to fundamentally transform capital markets across the spectrum of trading, clearing, settlement, and asset servicing.
In addition to exhibiting the possibilities of blockchain innovation, this collaboration between the World Bank and Euroclear demonstrates the enduring value of established international bond issuance models. It also encompasses Citi’s expanding suite of offerings in digital currencies, securities trading, custody services, and asset servicing. Overall, this pioneering DNN issuance lays the groundwork for unlocking greater efficiency, transparency, and interconnectivity in global debt capital markets through digitization.
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