Tech company Siemens has issued a new €300 million digital bond with a one-year maturity. The participation extends into the European Central Bank’s (ECB) digital settlement through distributed ledger technology (DLT).
According to the company’s press release, the digital bond was issued per Germany’s Electronic Securities Act (eWpG). The move allows the continued integration of blockchain technology with capital markets.
Siemens backs ECB’s blockchain securities settlement
Siemens, a technology company focused on several industries, has issued a new digital bond worth €300 million. The bond has a one-year maturity and is part of the European Central Bank’s (ECB) tests to explore how blockchain technology can be used in the capital and securities market with sovereign money. The goal seems to be to see if distributed ledger technology (DLT) can be a faster and more secure addition to the process of buying and selling securities.
As per the company press release, the bond issue follows Germany’s Electronic Securities Act (eWpG). The act defines how to introduce electronic securities by modifying the legal need to hold physical certificates of ownership. The act also makes way for crypto securities which allows companies like Siemens to issue any security or bond on blockchain.
Siemens’ recent bond issue happened on a private blockchain platform system called SWIAT and used the Bundesbank’s automated Trigger Solution. DekaBank acted as bond registrar, with investors like BayernLB, and DZ BANK.
In 2023, they issued a €60 million blockchain-based bond which settled in 2 days. This time around, the transaction reportedly settled within minutes in central bank money.
Blockchain has integrated into several mainstream businesses
Issuing securities on the blockchain has occurred for a few years. In 2018, the World Bank launched a blockchain operated new debt instrument through Australia’s CBA. In 2020, Japan’s Nomura Research Institute (NRI) announced the first blockchain-based bond issuance.
According to Infosys, the adoption of bond tokenization could continue to accelerate. This will be on the back of data and smart contract security that bond tokenization offers.
