The European Investment Bank (EIB) has successfully issued its fifth digital bond, valued at €100 million. Scheduled for settlement tomorrow, the bond utilises the pilot Euro wholesale central bank digital currency (wCBDC), part of the European Central Bank’s trials on distributed ledger technology (DLT) for wholesale settlement. These trials are set to conclude this month.
While often referred to as wCBDC, the Banque de France describes the tokens issued on its DL3S platform as “exploratory cash tokens.” A key feature of wholesale CBDCs is their ability to enable atomic settlement, where cash and ownership of tokenised securities are exchanged simultaneously, reducing counterparty risks.
This latest bond was issued on the HSBC Orion platform, marking the EIB’s second use of the system. The Banque Centrale du Luxembourg served as the central bank overseeing the issuance.
Each of the EIB’s digital bond issuances has tested different innovations, frequently employing new platforms. Its inaugural issuance in 2021 was conducted on the public Ethereum blockchain. More recently, the fourth issuance was a green bond, and this latest one demonstrates the use of an advanced settlement mechanism.
“We are proud to take a leadership role in showcasing how blockchain can drive greater transparency, security, and efficiency in financial markets,” said Cyril Rousseau, Director General of Finance at the EIB. “This issuance highlights our commitment to pioneering digital solutions that bolster Europe’s competitiveness and strengthen the Capital Markets Union.”
The bond was arranged by BNP Paribas, HSBC Continental Europe, and NatWest Markets as joint lead managers. Legal support was provided by Clifford Chance for the EIB and A&O Shearman for the joint lead managers.
As the Eurosystem’s DLT settlement trials reach their conclusion, some participants have expressed interest in extending the initiative to further examine the potential applications of central bank money in digital markets.
