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Italian banks complete first blockchain-based bond issue worth €25 million
Italian public bank Cassa Depositi e Prestiti SpA (CDP) and Intesa Sanpaolo, Italy’s largest bank, conducted a €25 million transaction using blockchain technology last Thursday. Intesa Sanpaolo invested in a bond worth that amount with a maturity period of four months. The transaction took place on the Polygon network, a layer 2 blockchain on Ethereum.
A press release released Intesa Sanpaolo’s bond reads: “The bond, with a nominal value of 25 million euros, has a duration of four months and a fixed coupon at maturity of 3.633%, calculated on an annual basis.” This marks the success of Italy’s large-scale experimentation with decentralized ledger technology (DLT), which is expected to be adopted by other EU members.
The press release also states that the operation took place “in the context of the participation of CDP and Intesa Sanpaolo in the experiment launched by the European Central Bank (ECB) to identify new solutions for the settlement in central bank money of wholesale transactions for transactions carried out on DLT”.
Countries around the world, especially in the EU, are looking to leverage blockchain for its many benefits, including transparency, immutability, and low settlement costs. Therefore, tokenizing financial instruments as real-world assets (RWA) and transacting them on blockchain networks can fill the gaps associated with traditional financial infrastructures.
“The promotion of a new market ecosystem and the implementation of an innovative, efficient and secure market infrastructure will provide added value to both issuers and investors, opening up new opportunities for other actors, including SMEs,” said Fabio Massoli, Director of Administration, Finance, Control and Sustainability at CDP.
“We are also proud to participate in the experimental program promoted by the ECB, to demonstrate the skills, including digital, present in our Group and the role that Intesa Sanpaolo is called to play on the markets, to support businesses and financial institutions, also through new technological infrastructures”, said Massimo Mocio, Deputy Chief and Head of Global Banking & Markets, IMI CIB Division of Intesa Sanpaolo.