European Investment Bank issues €105M digital bond on HSBC Orion

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The European Investment Bank (EIB) has issued its fifth digital bond: a €100 million ($105.6 million) fixed-rate three-year bond that settles in a wholesale central bank digital currency (CBDC) as part of the ongoing CBDC trials across the European Union.

EIB first issued a digital bond in 2021, tapping a public blockchain to register and settle the digital bond in a pilot that involved Banco Santander (NASDAQ: SAN), Societe Generale (NASDAQ: SCGLY), and Goldman Sachs (NASDAQ: GS). It has explored diverse features with each new issuance; the third bond, for instance, was deployed on a private blockchain network. The second bond was issued on the Digital Assets Platform, a tokenization platform owned by Goldman Sachs. The American bank is now spinning out the platform to become an independent offering, according to a Bloomberg report this week.

With the latest bond, the regional investment bank’s new feature is the settlement in a wholesale CBDC. EIB, the largest multilateral financial institution globally, is utilizing pilot wCBDC tokens issued by the Banque de France through its D3LS platform, which the central bank uses to test the interoperability of wholesale CBDCs with existing financial networks.

EIB’s use of D3LS comes days after state-owned French bank Caisse des Dépôts settled a $108 million digital bond through wCBDC tokens issued through D3LS.

Banque de France remains the European leader in using wCBDC for digital bonds. Its peers, such as Germany and Italy, have opted for customized solutions, such as Trigger for the Deutsche Bundesbank.

As Banque de France’s Emmanuelle Assouan noted in her comments, one key advantage of the wCBDC over other solutions is that it eliminates counterparty risk through atomic settlements.

EIB issued the digital bond on Orion, the tokenization and digital assets platform by HSBC (NASDAQ: HSBC). Orion, a permissioned blockchain solution, has gained popularity with many banks across Europe and Asia for issuing digital bonds. HSBC, UBS, SBI (NASDAQ: SBHGF), Germany’s WIBank, and more have launched digital bonds on Orion.

“The new EIB blockchain bond is a major step forward in our drive to modernize capital markets and harness innovative technologies in finance,” commented Cyril Rousseau, EIB’s Director of General Finance.

The issuance also involved Europe’s largest bank, BNP Paribas (NASDAQ: BNPQF), the U.K,’s NatWest (NASDAQ: RBSPF), and the French subsidiary of HSBC as joint lead managers. London-based multinational law firm Clifford Chance advised the EIB on the issuance. Steve Jacoby, a partner at the law firm, noted that the expansion of EIB’s digital bonds projects shows the “continued strong interest of market participants in digital capital markets transactions.”

SBI, UBS automate tokenized fund management

In Singapore, two of the world’s largest banks have completed the implementation of a tokenized fund that demonstrated how smart contracts can automate asset management.

The pilot was part of Project Guardian, a tokenization and digital asset initiative by the Monetary Authority of Singapore (MAS). This is not the first tokenization project between the Japanese and Swiss banks; a week ago, they issued a tokenized fund accessible through authorized distribution partners to accredited investors.

In their latest project, the two sought to prove that implementing an ‘onchain format’ in the fund administration industry can unlock efficiencies and cut costs. They limited the scope of their project to integrating existing fund management systems with tokenized funds “once they are made compatible with blockchains and smart contracts.”

Citing a study from automation firm Quantios, the banks noted that 93% of fund managers have yet to fully automate even the most basic processes. This results in consistent manual interventions, delayed settlements, and a lack of transparency for investors.

Their pilot concluded that blockchain, tokenization, and smart contracts could resolve this. Benefits included fewer errors or manual interventions—saving time and costs—and enhanced efficiencies. Investors also enjoyed higher levels of transparency.

The solution is currently active on testnets on multiple blockchains and is expected to transition to mainnets over the next few weeks.

“This new way of launching fund structures and administering them via smart contracts empowers both fund managers and their service providers to deliver new onchain financial products and lower operational costs to investors, both things they are actively looking for,” commented SBI’s Winston Quek.

The pilot is the latest to prove the transformative impact that tokenization can deliver in the financial sector. However, as each financial institution races to become the industry leader, the risk of siloed and limited solutions threatens progress. The two banks, for instance, have their own tokenization platforms: SBI has its Digital Markets subsidiary, while UBS Tokenize is the Swiss bank’s in-house tokenization service.

EIB, which launched its €100 million digital bond on HSBC Orion, has used four different platforms for its five bonds from Societe Generale, HSBC, Goldman Sachs, and Credit Agricole (NASDAQ: CRARF).

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