The Swiss city of Lugano has issued its third bond using blockchain technology. The bond has a value of $139 million and is listed on both the digital exchange and the traditional exchange.
According to a November 7 Global Government fintech report, the city of Lugano has issued three digital bonds in the past two years – worth a total of CHF320 million ($365 million). The digital bonds are issued using distributed ledger technology and are listed on both the SIX Digital Exchange and the SIX Swiss Exchange, Switzerland’s main stock exchange.
The city’s latest blockchain bond was announced on November 4 and valued at CHF 120 million. It was issued as part of the Swiss central bank’s digital currency pilot program known as Project Helvetia. The bond settlement is scheduled for November 25 through the CBDC wholesaler.
Lugano issued its first blockchain bond in January 2023. It was called a “digital native” bond with a term of six years and a value of CHF 100 million.
The second blockchain bond, also worth CHF 100 million, was issued in February 2024. The bond was issued as a joint initiative with Zürcher Kantonalbank and Basler Kantonalbank and has a term of 10 years and a coupon of 1.415%.
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Lugano’s deputy chief financial officer, Paolo Bortolin, claimed he did not understand why other issuers were reluctant to issue digital bonds via the blockchain. In his experience, the process was seamless and not much different from the process of issuing a conventional bond.
“After the initial issuance, we realized that this technology could represent the future of finance, and we committed to continue issuing digital bonds on SDX,” he said.
He said the use of blockchain technology by the public sector is still low. Therefore, he hopes that Lugano’s continued efforts to issue digital bonds will help promote widespread adoption.
“Our latest issuance has further demonstrated that investors are willing to buy digital bonds, with full subscription within an hour. I strongly encourage other issuers to join us in embracing the digital future of the financial sector,” said Bortolin.
In addition to Lugano, the city of St. Gallen, the Union Bank of Switzerland and the World Bank have also issued bonds on the SDX.
Lugano is widely known for its adoption of cryptocurrency and its mission to transform the city’s financial system into a hub for Bitcoin and blockchain innovation.
In December 2023, Lugano started accepting Bitcoin (BTC) for tax payments. The city also launched a Bitcoin-linked stablecoin called LUGA that can be used for payments at more than 350 merchants in the city.
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