Italy’s state-owned development bank Cassa Depositi e Prestiti SpA (CDP) and Intesa Sanpaolo, the country’s largest lender with more than $1 trillion in assets, on Thursday completed a digital bond issuance using blockchain rails, the first such transaction under the country’s new digital asset rules.
The €25 million four-month bond was issued by CDP on the Ethereum-based Polygon (MATIC) network, with Intesa Sanpaolo as the underwriter and sole investor, a press release said. The cash flow was settled in euros on the same day (T+0) using the Bank of Italy’s ‘TIPS Hash Link’ tool, which enables interoperability between blockchains and traditional payment rails.
The transaction marked the first issuance of digital bonds under the country’s so-called ‘FinTech’ decree law, which regulates the issuance and circulation of digital versions of certain financial instruments, the banks said.
The issuance was part of the European Central Bank’s (ECB) initiative to trial ways of settling fiat money on blockchains.
Global banks and asset managers are increasingly exploring ways to put traditional financial instruments such as bonds, credits and funds on blockchains, known as tokenization of real-world assets. They do this to achieve operational benefits such as faster and more transparent transaction settlements, lower costs and greater efficiency.
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“This transaction shows how public blockchains are a powerful technology for financial institutions, making transactions faster and more secure,” said Niccolò Bardoscia, head of digital asset trading and investment at Intesa Sanpaolo, in a statement LinkedIn message.
“Tokenization is setting a new standard for efficiency and automation in the financial markets, and I believe this technological change will impact not just bonds, but every asset class in the coming years,” he added.