DekaBank Issues Digital Bond Using ECB’s Wholesale Digital Euro
DekaBank, a German banking conglomerate, has issued a digital bond as part of the European Central Bank’s (ECB) wholesale digital euro trial. This move is a significant step in the development of digital assets and showcases the potential of blockchain technology in the financial sector.
The Digital Bond and its Features
The bond was issued on DekaBank’s institutional blockchain network, SWIAT, which now has 24 clients. The bond was purchased by Bankhaus Metzler, a Frankfurt-based private bank, using the wholesale digital euro.
This transaction leverages the “Trigger Solution” developed by the German central bank. This solution allows banks to integrate digital euro payments without needing to upgrade their existing systems. DekaBank’s SWIAT integrated into the Trigger Solution, facilitating settlement in central bank money.
The use of distributed ledger technology (DLT) guarantees finality through delivery-versus-payment transactions, meaning both the bond and payment are settled simultaneously. This eliminates the need for a central securities depository or intermediaries, making the process more efficient.
Implications for the Future of Finance
Silvio Lenk, the head of treasury at DekaBank, believes this is a game-changer. He points out that blockchain-based securities transactions can be conducted faster and more transparently than traditional methods.
DekaBank is not alone in its exploration of digital bonds. Last week, the bank issued a €5 million digital bond on Deutsche Börse’s DLT securities platform, D7. DZ Bank, Germany’s second-largest bank, also issued a similar bond. Both transactions used the Bundesbank’s Trigger Solution and were settled using digital central bank money.
These developments highlight the growing interest in digital assets and blockchain technology within the financial sector. Germany’s Electronic Securities Act (eWpG), passed in 2021, allows German firms to issue tokenized securities, paving the way for a new era in securities trading.
DekaBank’s involvement in these initiatives demonstrates its commitment to embracing innovation and exploring new ways to optimize financial processes. The bank’s position as a leading player in the post-paper securities industry is further strengthened by its participation in these groundbreaking projects.
