Slovenia Makes History with First EU Sovereign Digital Bond Issuance
- Slovenia has issued the EU’s first sovereign digital bond, with the €30 million ($32.5 million) bond to be settled through the French central bank’s tokenized cash system.
- BNP Paribas uses the Neobonds platform on the Canton blockchain to coordinate the issuance.
Slovenia leads EU in digital finance
Slovenia has made history by becoming the first EU member state to issue a sovereign digital bond. The landmark issuance, valued at €30 million ($32.5 million), represents a significant advancement in the use of blockchain technology in sovereign debt instruments. The digital bond has a coupon rate of 3.65% and is expected to mature on November 25, 2024.
The Evolution of Digital Bonds
Unlike traditional bonds, digital bonds use blockchain technology to improve the transparency, efficiency, and security of issuance and trading processes. The adoption of digital bonds has increased over the past few years, with some countries issuing large numbers of digital bonds. For example, in 2019, Société Générale issued a $10 million green bond on the Ethereum blockchain. Similarly, in 2021, Germany’s Vonovia issued a digital bond worth 20 million euros ($24.3 million) on the Stellar blockchain.
The Significance of Slovenia’s Issuance of Digital Bonds
Slovenia’s issuance of a sovereign digital bond marks an important milestone in the modernization of financial markets. The Slovenian government sees these initial transactions and wholesale tokenized central bank currency experiments as key steps towards increasing the transparency and efficiency of financial markets. BNP Paribas played a key role in the offering, serving as global coordinator and sole bookrunner.
The Future of Digital Bonds in Financial Markets
Digital bonds have the potential to significantly increase the transparency and efficiency of financial markets. Utilizing blockchain technology can make the issuance and settlement process faster, more secure, and less expensive. Robinson Rouchie, Chief Information Officer at BNP Paribas, emphasized the importance of this development in pioneering change in asset management. Global finance is poised for a major transformation as more countries and financial institutions explore the potential of digital bonds.
