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100M Euro Digital Bond Inaugurates Euroclear's Tokenized Securities

The major European clearinghouse launched its real-world asset tokenization service with the issuance of the World Bank’s 100 million euro bond.

Major European clearinghouse Euroclear has announced the launch of its Digital Securities Issuance (D-SI) service, enabling the issuance, distribution and settlement of what it calls Digitally Native Notes (DNN) using R3’s Corda blockchain, according to a press release.

The first DNN out of the gate was a three-year 100 million euro ($105.5 million) digital bond issued by the World Bank (International Bank for Reconstruction and Development) to support the financing of its sustainable development initiatives. This has been listed on the Luxembourg Stock Exchange.

Additional parties to the issuance included Citi’s Issuer Services, as issuing and paying agent, TD Securities, as the dealer, and Euroclear Bank as the issuer Central Securities Depository.

The D-SI service forms part of Euroclear’s Digital Financial Market Infrastructure (D-FMI) platform, which is connected to the firm’s traditional settlement platform, allowing users access to secondary market operations such as liquidity management.

The move is part of the ongoing global digitalization of traditional financial services, which has seen the increasing tokenization of real-world assets (RWA), to embrace the benefits and efficiencies enabled by blockchain technology.

The World Bank was instrumental in issuing the world’s first digital bond in 2018, although this latest release marks a significant advance due to its size. According to World Bank Group’s Managing Director and CFO, Anshula Kant:

“A transition to digitisation is underway in the capital markets. Euroclear’s new service offers issuers and investors an opportunity to take another step along this journey. The World Bank… is pleased to now be the first issuer to participate in this new service which offers full scalability and transparency”

This year has seen the tokenization of RWA step firmly into mainstream finance with a number of increasingly ambitious projects. The Bank of China issued the world’s first tokenized bank notes in Hong Kong in June, and UBS launched a Variable Capital Company fund in Singapore earlier this month.

The market for tokenized assets is anticipated to continue its expansion, and could reach a value of $10 trillion by the end of the decade, according to a recent report.

Traditional finance (TradFi) is forging ever-closer bonds with the cryptocurrency and decentralized finance (DeFi) industries, perhaps best exemplified by the current excitement around spot bitcoin exchange-traded funds (ETFs).

This has seen the price of bitcoin jump 25% in the past ten days, reaching almost $35,000 for the first time since May of 2022.