Italy’s Top Banks Participate in €25M Digital Bond Issuance on Polygon in ECB Trial

Italy’s
state-owned
development
bank
Cassa
Depositi
e
Prestiti
SpA
(CDP)
and
Intesa
Sanpaolo,
the
largest
lender
in
the
country
with
over
$1
trillion
of
assets,

completed
a
digital
bond
issuance
using
blockchain
rails
on
Thursday,
the
first
such
transaction
under
the
country’s
new
digital
asset
rules.

The
€25
million
bond
with
a
four-month
maturity
was
issued
by
CDP
on
the
Ethereum-based
Polygon

(MATIC)
network,
with
Intesa
Sanpaolo
being
the
underwriter
and
sole
investor,
according
to
a
press
release.
The
cash
flow
was
settled
in
euros
on
the
same
day
(T+0)
using
the
Bank
of
Italy’s
“TIPS
Hash
Link”
tool
that
allows
interoperability
between
blockchains
and
traditional
payment
rails.

The
transaction
was
the
first
digital
bond
issuance
under
the
country’s
so-called
“FinTech”
decree-law,
which
governs
the
issuance
and
circulation
of
digital
versions
of
certain
financial
instruments,
the
banks
said.

The
issuance
was
part
of
the
European
Central
Bank’s
(ECB)
initiative
to
trial
ways
for
wholesale
fiat
money
settlement
on
blockchains.

Global
banks
and
asset
managers
are
increasingly
exploring
ways
to
put
traditional
financial
instruments
such
as
bonds,
credit
and
funds
on
blockchains,
also
known
as
tokenization
of

real-world
assets.
They
do
so
to
achieve

operational
benefits
such
as
faster
and
more
transparent
transaction
settlements,
lower
costs
and
greater
efficiency.

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“This
transaction
demonstrates
how
public
blockchains
are
a
powerful
technology
for
financial
institutions,
making
transactions
faster
and
safer,”
Niccolò
Bardoscia,
head
of
digital
assets
trading
and
investments
at
Intesa
Sanpaolo,
said
in
a

LinkedIn
post.

“Tokenization
is
establishing
a
new
standard
for
efficiency
and
automation
in
financial
markets,
and
I
believe
this
technological
change
will
impact
not
only
bonds
but
every
asset
class
over
the
coming
years,”
he
added.