European Investment Bank (EIB) and the European Union’s (EU) bank have planned to take blockchain technology’s help for digital bond trading. EIB wants to utilize blockchain for registration and settlement purposes in bond trading. The digital-ledger technology would be used to bolster the European debt market. For this, EIB is going to meet three investment banks to take their assistance in this process. According to Bloomberg reports, the preliminary meeting is going to be held on April 15, 2021. The three commissioned banks are Goldman Sachs Groups Inc., Société Générale AG, and Banco Santander SA.
Blockchain can digitize the manual process of bond issuance by providing a blockchain shared registry without a central securities depository. Also, it can help in settlements by facilitating instant delivery or payments, thereby eliminating counterparty risks.
The EIB also undertook the development of a blockchain platform for processing European money market papers in 2019 along with Ernst Young, Euroclear, and Banco Santander. Earlier, both Santander and Societe Generale have been involved in issuing several bonds on blockchains. According to the President of the European Central Bank, Christine Lagarde, EIB plans to introduce a digital currency of its own and develop it within 4 years.
In 2018, Australia’s World Bank launched multiple tranches of digital investment bonds. Apart from this, the Bank of Thailand also collaborated with the tech giant IBM in 2020 to introduce its blockchain-based government savings bond platform. The Philippines has also issued blockchain-based retail treasury bonds. Germany’s central bank is busy implementing a new system to allow customers to sell securities on the blockchain ledger and receive the payments directly in their bank accounts. Even the US ConsenSys undertook a brokerage firm recently to utilize the blockchain technology in the municipal bond market.