Italy Issues First Digital Bond on Polygon Blockchain
Italy’s Cassa Depositi e Prestiti Spa (CDP) has issued a €25 million digital bond on the Polygon public blockchain. This is a significant step for the Italian government and the adoption of blockchain technology in the financial sector.
The issuance was underwritten by Intesa Sanpaolo and is part of the European Central Bank’s (ECB) wholesale DLT settlement trials.
Key Features of the Bond:
* **Settlement using central bank money:** The bond was settled using the Bank of Italy’s TIPS Hash Link solution, which provides connectivity between a DLT and the TARGET2 system for wholesale funds.
* **First to use Italy’s ‘Fintech decree’ regulation:** The issuance is the first to use Italy’s Fintech decree, which enables direct securities issuance and transactions without requiring central securities depositories (CSDs) or bank intermediaries.
* **Digital Register:** The bond utilizes a Digital Register managed by CDP itself, as allowed by Consob, Italy’s securities regulator. This register acts as a log of the owners of the securities.
* **Four-month term:** The bond has a term of four months and was rated A-2 by S&P, F-2 by Fitch and S-2 by Scope.
Implications for the Future
The issuance of this digital bond has significant implications for the future of finance in Italy and beyond. It demonstrates the potential of blockchain technology to create more efficient and secure financial markets.
The use of central bank money for settlement is a crucial step in the development of a CBDC. The use of a Digital Register also demonstrates the potential for blockchain technology to create a more transparent and secure system for managing securities.
This issuance is a major milestone in the adoption of blockchain technology in the financial sector. It is expected to encourage further innovation and experimentation with DLT in the future.
